Separation and divorce amongst those of the Baby Boomer generation in their 50s and 60s has been dubbed “Grey Divorce,” but I prefer the less depressing term silver separation.
Silver separation is on the rise, with the average age of divorcing couples increasing over the last 25 years. The Australian Bureau of Statistics reports that the median age at divorce for males in 2014 was 45.2 years of age and for females 42.5 years of age.
With the increase in life expectancy and Baby Boomers’ exuberant approach to life the typical post–retirement Baby Boomer can look forward to another 25 years of active life. It’s often post retirement, with an empty nest and more time with their spouse, they may find they don’t have a lot in common with the other party. Differences in values, routines, expectations and annoying habits are highlighted and can lead to deterioration in marriage.
With a much longer life expectancy than their parents and certainly better health outcomes during that life expectancy, a common theme among older separating parties is that they don’t have a lot of active time left to live in an unhappy relationship. While they don’t wish to hurt their family, once the children have left home, they want to start making decisions for themselves.
An older couple is likely to have a complex retirement structure, perhaps a self-managed superannuation fund, share portfolios or where the parties have retired, income streams from defined benefit superannuation. Superannuation funds before retirement can be divided fairly as can the income stream from a superannuation fund once in the payment phase.
A silver separation brings with it the need for an even greater emphasis to be placed on a negotiated outcome and the use of alternative dispute resolution methods before recourse to litigation, to preserve as much of the asset pool as practicably possible. It’s even more important to seek both financial and specialist legal advice about the best means to achieve a civilised division of assets, to avoid heading down the litigation path.
More often than not the biggest assets available for division are the former family home and superannuation assets. As in the younger couple separating, the older couple face the same issues of whether to retain the home as a “trade off” for other assets. While it can be an emotional decision to give up a long-time home, in the majority of cases, the most appropriate course is a sale of the former matrimonial home rather than leaving one party asset rich but cash poor. Retaining the family home brings with it the added burden of maintaining the home on a lower income.
The silver lining of a silver separation is that it’s not going to have the same gut-wrenching child issues that younger couples may face, although many are concerned about protecting their children’s inheritances following separation, particularly if a new relationship is formed. In such circumstances, a financial agreement should be considered.
The breakdown of any relationship is challenging, but in many ways, Silver separation presents the most difficult challenges all. Be sure to engage qualified advisers who recognise your unique position while assisting to ensure your financial stability in both the short and the long-term.