The best financial advice before retirement? work on your marriage

In the 2012 edition of the annual Horizons Retirement Survey conducted by Vancouver-based RGF Integrated Wealth Management, 73 percent of respondents were very confident that their marriage would adjust to retirement. In the 2022 version, only 49 percent were very confident.LumiNola/iStockPhoto/Getty Images

With one notable exception, a decade of strong real estate and stock gains appears to have produced a sense of complacency about personal finance.

The 2022 edition of the annual Horizons Retirement Survey conducted by Vancouver-based RGF Integrated Wealth Management shows little progress in financial literacy compared to 10 years ago. And, if you can believe it, fewer and fewer people deal with wills and powers of attorney. When it comes to retirement aspirations, there has been a slight move toward thinking about lifestyle rather than finances.

The only noticeable change comes from a seemingly innocuous question: “How confident are you that your marriage will adjust to changes in life and finances that may come after retirement?”

In 2012, 73% were very confident that their marriage would adjust to retirement, 26% were somewhat confident, and 1% were not at all confident. In the 2022 version, only 49% were very confident, 45% were somewhat confident, and 6% were not at all confident.

Some advice for people hoping to retire: Work on your marriage. “All I know is that the worst financial mistake you can make is getting divorced later in life,” said Clay Gillespie, CEO of RGF.

The term gray divorce is used to describe marital breakups between people age 50 and older. A recent Statistics Canada study of divorce from 1970 to 2020 found that gray divorce rates rose 26 percent between 1991 and 2006, then leveled off. But it’s a topic that resonates with financial planners and advisers.

“I have seen this trend in my practice,” said Mr. Gillespie. “It is not uncommon for clients whose children have left home to be more in tune with what they want to achieve personally in life than as a couple. They don’t know each other anymore.”

Longer life also contributes to gray divorce, Gillespie said. Decades ago, people retired around age 65 and lived about 10 years longer. Now, couples may spend two decades or more together after retirement.

The financial destruction of divorce is the result of the division of a couple’s assets. Separating is a hard lesson in how much more profitable it is to live and retire as a couple.

“I try to explain to people who are getting divorced that their life has to change because they are paying for two houses and two lifestyles,” Mr. Gillespie said. “There are two households and each one has less money.”

The RGF survey involved more than 200 people with investable assets of $200,000 or more who planned to retire in one to 10 years and another 150 who were already retired. On general personal finance and investment issues, the survey results suggest that the relative prosperity of the past decade has diminished our sense of urgency in addressing financial matters. When your home is going up in value and your investments are skyrocketing, why worry?

In the 2022 version of the RGF survey, 76 percent of participants expecting to retire had a will. In 2012, 82 percent said they had a will. Forty percent said they had designated powers of attorney in 2022, compared to 49 percent in 2012. Also, more people said they used an advisor in 2012, and more said they had a written financial plan.

The survey also asked some basic investment questions to assess financial literacy. Let’s just say the results aren’t impressive. For example, 45 percent correctly said that bond prices go down when interest rates go up, up from 46 percent in 2012.

This may seem like too esoteric a question to judge people, but we are living in a period where interest rates are rising higher and higher and bond prices have plunged in a way that many investors have never seen before. If you knew how bonds work, you would understand that today’s declines are temporary and will change course when interest rates fall.

Mr. Gillespie said he was very surprised by the survey’s divorce results, even if it is sometimes a financial sounding board for clients considering separation. “The sad thing is that when someone wants to get a divorce, I usually know about it before their spouse does.”

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