Now divorced, Pamela Smith is responsible for the financial planning for herself and her sons Hudson Seeman, left, 9, and Caleb Seeman, 13. stand for a photograph on the pier at John Lawson Park in West Vancouver, B.C., on Thursday October 15, 2015. DARRYL DYCK FOR THE GLOBE AND MAILDARRYL DYCK/The Globe and Mail
Like many married women, Pamela Smith left the financial planning part of the relationship to her husband, a chartered accountant who crunched numbers for a living.
For the 15 years they were together, he looked after their financial portfolio, which included a home, a vacation property and a handful of bank and investment accounts for themselves and their two young sons.
But when the couple got divorced five years ago Ms. Smith was suddenly forced to figure out her own finances, including how she was going to save for her retirement.
"I had no idea what to do," says Ms. Smith, 44, a North Vancouver-based writer and communications professional. "He took care of everything."
Experts say the longer a couple is married, the more financially dependent they become, especially if they have children. A divorce means they not only have to untangle their finances but adjust to what is generally a higher cost of living separately.
Getting divorced doesn't mean you have to save twice as much, experts say, but it does mean higher costs for some single-person items such as housing and travel – and potentially the need to build up a larger nest egg, depending on lifestyle and consumption habits.
For example, if a couple needs to save $1-million for retirement, a single person should consider saving about $700,000 to maintain the same lifestyle, estimates Simon Tanner, principal adviser at Vancouver-based Dynamic Planning Partners.
"Getting rid of your partner only saves you about 30 per cent of your need," he says.
When it comes to retirement travel, he estimates a single person's costs will come in at about 55 to 70 per cent of what a couple would pay. "You're only buying one plane ticket, but you still need to pay for the full hotel room," says Mr. Tanner.
For the home, a single person will likely pay less in utilities compared to a couple, but property taxes, condo fees and insurance costs are the same for singles and couples.
Louise Newburry, an associate consultant with Lowe & Associates at Investors Group in Calgary, says there are long-term financial implications to splitting assets and, if the couple has kids, paying spousal and child support. In those cases, divorced people will need to make adjustments to help pad their nest eggs.
"You might have to work a little longer instead of retiring early," Ms. Newburry says. Divorcees may also need to trim their expenses while working.
In an attempt to prove she could successfully build her own financial nest egg, Ms. Smith got together with two other divorced women and invested in a Burnaby, B.C., condominium project at the preconstruction stage. However, when her two partners backed out, Ms. Smith was stuck with all three of the investment properties and feeling overleveraged.
That was when she realized she needed a different retirement strategy.
Ms. Smith enlisted an accountant and a financial adviser, and then a mortgage broker and real estate agent once she decided to sell the properties and reboot her financial plan.
"I'm not very financially savvy or interested in doing anything high risk, but I do want to grow my portfolio and set some goals so that I have funds for retirement," says Ms. Smith, who plans to blog about her foray into postdivorce financial planning.
Some people might have to take a hit on their retirement savings to pay out an ex-spouse in a divorce settlement, which happened to Edmonton-based Jane Jones (her name is changed to protect her privacy).
When Ms. Jones and her husband divorced four years ago, after about 15 years of marriage, they split their assets. Ms. Jones was also required to pay a six-figure settlement that took into consideration her pension earnings and alimony, because her husband had stopped working years earlier and became a stay-at-home parent.
"I'm just starting to recover from the financial fallout and it could take a few more years before I'm back to par," says Ms. Jones.
Divorce is a financial setback for a lot of people, but it doesn't have to be a dead end, says Gina Macdonald, a financial planner with Macdonald Shymko & Co. Ltd. in Vancouver.
"Being single versus being in a couple means you need to be more strategic about your planning and investment," she says. "It's a good time to stop and reassess what's important for you and what you want to do in retirement."