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Paying Spousal Support Can Halt Retirement Plans
The issue of retirement is essentially a man-made 20th Century creation.
What would you decide?
Jack and Jill met when both of them were in a physiotherapy program at university. They graduated from the course together and after they got married, they worked together at a clinic. Jill took time off after the birth of their first child and briefly returned to work until they had twins. With three little ones at home, they made the decision for Jill to stay at home to raise the children and be the Chief Executive Officer of the household. Jack continued to build his career and earned a reasonable income which allowed them to live comfortably, but it did not give them much of an opportunity to save money.
When their marriage fell apart, after being together for 26 years, Jill was not able to get back to being a physiotherapist and had to settle for a job making minimum wage, at least during those days when she was able to get to work and wasn’t suffering from debilitating migraines that had plagued her over the last ten years of marriage.
At the time of the divorce settlement they had a house with a little bit of equity and Jack had a small RRSP. They both ended up with about $100,000 which quickly evaporated once they had to settle into new accommodations and help their children with university expenses. Jack is now 63 years of age, he has been paying support for Jill over the last ten years. He has remarried to a woman who is 12 years younger than him and is a senior manager at the Toronto Dominion Bank.
Jack wants to retire at age 65. Jack goes to court asking the judge to make an order that allows him to retire and stop making support payments to Jill. Jill who is also 63 years of age lives alone in a small house and has no savings to speak of. Her position is that she simply cannot live on the little bit of money she makes, or her anticipated CPP. She wants Jack to keep on working to support her.
What should the judge do in these circumstances?
Does Jack have a right to retire?
Is it fair that Jill could end up living in poverty in her old age because Jack can afford to leave work and be supported by his new wife?
What is the magic in retiring at age 65? After all, most judges work until 75.
The issue of retirement is essentially a man-made 20th Century creation. Historically in society there was no notion of retirement since most of those who worked for a living toiled until their dying breath. In 1889, in order to combat the growing popularity of fascism, Chancellor Otto Von Bismark, the Chancellor of German, enacted the Old Age Disability Bill which provided for a pension for all workers at age 65. At that point in time, given the fact that the average life expectancy was around 45, the legislation did not benefit many people, however, it did introduce the notion of a target date for retirement that persists to this day.
A report by Statistics Canada in 2012 tells us that “Grey Divorce” has been steadily growing for those 55 years of age and over. These rates are increasing as more people continue to age reflecting the demographics of the baby boomers getting into their sixties and beyond. This phenomena combined with the global economic crisis over the last number of years are creating a legal and practical challenge as to the average family’s ability to make ends meet into their late sixties and beyond. This dilemma has been exacerbated by the fact that life expectancy has been increasing at the same time as pension funds and savings have been going in the opposite direction. A survey done in 2008 has shown that in Canada the debt per person was more than five times in 2005 than it was twenty-five years before that. In the meantime, personal savings rates dwindled from a high of 20.2 % back in 1982 to a measly 1.2% in 2005.
Given these realities then, let’s get back to Jack and Jill.
Since Jack is still healthy and competent to continue to work at his profession, should he be allowed to retire?
If not, how long should he be expected to work?
There are no legal hard and fast rules about this important issue. However, in a decision made by a judge of the Ontario Superior Court of Justice not that long ago, the court basically told the former husband who wanted to retire that he should only do so if his ex-wife’s retirement savings can be expected to keep her in a similar standard of living to the one that he would enjoy after retirement. The court concluded that if it were not to be so, the lack of spousal support tends to leave payee spouses (usually women) in a position of dire financial needs at a time when they cannot take meaningful steps to improve their own condition.
Do you agree?
At some point should the problem of older people not having enough money to live on be an issue that society and the government should deal with rather than an ex-spouse?
Should the Canada Pension Plan be amended to provide more money to those who left the work force in order to raise children and look after the household?
Should family law be used in order to dictate what one can or cannot do with his/her life?
Can law be used as a tool of social engineering?
There are no easy, or even hard answers in family law. But what we do know for sure is that going to Court to find out an answer is not an option for many separated families. The legal cost would leave them no better off even if they win! That is a serious topic for another day.