(NC) -- Financial settlements from a divorce can have a big impact on a person's security – and that concern doubles when a marriage suddenly ends later in life.
If divorce in retirement is happening to you, you're not alone. The so-called 'grey divorce' has been identified as a growing 21st century trend.
Although divorcing later in life poses some unique challenges, it also means that you may have access to some unique financial tools that are not readily available to people in their 30s and 40s.
For instance, if the house is settled on your side of the ledger, you may be able to shore up your finances and enhance cash flow by tapping into the equity of your home. This is done by arranging a reverse mortgage.
“Instead of selling your house and downsizing or even renting, why not stay in it and receive payments based on its real estate value?” says Arthur Krzycki, a director with HomEquity Bank. “Accessing the equity in your home with a reverse mortgage like a CHIP Home Income Plan is a simple and sensible way to reduce the financial burden normally associated with divorce.”
Here's how CHIP works:
• If you're aged 55 and over, you can convert up to 50 per-cent of your home equity into tax-free cash.
• Unlike other loans on the market, you are not required to service the interest, or repay the principal until you choose to move or sell.
• You also have the option to take a lump sum to pay off your debts, or for home repairs and modifications. Or you can schedule monthly advances to enhance your cash flow on a regular basis. Some homeowners do both.
“It's never too late to bolster your finances by taking money out from your house while continuing to live there. For example, using a reverse mortgage to provide additional cash income could save homeowners from having to sell non-registered investments, or prevent the need to withdraw money from a RRIF above the annual minimum. Both of these strategies will likely have tax implications, so be sure to work with a financial advisor for solutions that fit your needs.”
Additional information is also available online at www.chip.ca.