Navigating divorce after 50

Psychologists equate adapting to post-divorce life, especially in later years, to navigating some of life’s most tumultuous events. This journey parallels the challenges of bereavement, relocation, severe health issues, or sudden unemployment. While these upheavals often occur beyond our control, our approach to managing them significantly influences our recovery process.

The Rising Tide of Grey Divorce

Contrary to the overall declining divorce rates since the 1990s, both the age at divorce and the frequency of separations among long-term couples are climbing. Australian Seniors and ABS data reveal that a third of divorces now occur after the half-century mark.

Financial Ripples of Late-Life Separation

Superannuation typically forms a crucial part of pre-divorce financial settlements. It’s vital to understand that super can be divided without necessitating fund withdrawals or meeting specific conditions if no prior agreement exists. While splitting isn’t mandatory, ensuring its inclusion in the settlement is crucial due to its significant role in overall wealth. However, division can substantially diminish what was once a robust retirement fund, potentially derailing long-term financial plans.

Beyond the emotional strain, asset division can be complex. Factors like investment properties, primary residences, or self-managed super funds (SMSFs) with less liquid assets—such as business holdings, real estate, or art collections—can further complicate matters.

Hasty asset sales without proper guidance can trigger capital gains, while transferring assets from tax shelters like superannuation or trusts may result in substantial tax liabilities.

Centrelink entitlements and thresholds will also shift with your changed circumstances.

Seeking multifaceted professional advice, beyond just legal counsel, is the most prudent approach.

The Hidden Costs of Divorce

Post-divorce, many shared expenses become individual responsibilities. For instance, while an Australian couple’s average monthly living expenses total around $4,118 ($2,059 per person), a single person living alone faces estimated costs of $2,835. Essentially, each individual spends roughly 70% of what a couple would spend.

Following divorce, with each person potentially retaining only half of their assets but requiring around 70% of their previous income to cover living expenses, budgets often become strained.

Rebuilding Financial Stability Post-Divorce

To regain financial footing after divorce:

• Update your superannuation death nominations, potentially changing beneficiaries or implementing binding nominations.
• Review and revise your Will to reflect your current situation, ensuring the right people inherit your assets.
• Consider strategies to rebuild or manage retirement savings, investments, and income.
• Reassess your budget and retirement expectations. Consider adjusting your risk tolerance levels.
• Seek advice on Centrelink entitlements, as thresholds may change, potentially opening up new benefit eligibilities.
• Evaluate your debt situation, considering how much, if any, debt you should take on to re-enter the property market or rebuild assets.

In essence, review your financial plan and seek professional advice. A qualified financial adviser can help you regain control of your finances and chart your future course.

Remember, the power of compounding means that the sooner you start, the better positioned you’ll be for the future.

Seniors.com.au The Australian Seniors Series: Love After 50 Report 2023’, Australian Seniors, 11 December 2023.