New divorce statistics
Most people understand that there will probably be a change in lifestyle when one household splits into two. And it’s obvious that for someone who has not been in the workforce for a while, divorce is likely to have a big impact. But what are the long-term financial impacts of divorce?
Some new research by the Australian Institute of Family Studies has shed light on some of the specifics of the financial impacts of divorce.
After crunching data obtained from a national study of 3,000 older Australians, the research found that divorced Australians aged 55 to 74 had less household disposable income and fewer assets than their married peers, who were better able to hold onto and grow the value of their assets.
One of the more interesting findings of the research is that men and women who remarried “were generally able to restore their income levels to match or even better those who had stayed married”.
What about gender?
The new research on the financial impacts of divorce indicates that men end up slightly worse off than women on the issue of household disposable income. On average, single divorced men were $10,000 worse off compared to single divorced women who were $6,300 worse off. Despite that finding, practitioners say they usually see older women pay the higher price, lacking the same earning power as men, and often having missed out on income and accumulating superannuation after years out of the workforce raising children.
Another issue that may contribute to women being worse off after divorce is the fact that it is often women who keep the family home, rather than other, more liquid assets or super assets. As one family lawyer put it, “The implication over time is that you can’t eat a house — it won’t generate revenue, and it will curtail your ability to generate other revenue. Especially if the person in the home was the non-working spouse or lower income earner.”
All of which really underscores the importance of getting good financial advice and making sound financial decisions when divorcing, particularly for older women. It can be extremely worthwhile at the stage of considering your options after separation to speak with both a family lawyer and an accountant/financial planner with a view to getting holistic advice. Whilst you may wish to keep a home for emotional reasons, consider having a planner model a number of options involving obtaining a smaller home, taking a bigger cut of tax – effective super, having some funds with which to purchase an investment etc. You may be surprised at the extent to which your options can have a huge difference over 20 or 30 years.
It’s also worth noting again that “keeping the family money within the family” is typically not achieved through costly litigation. Alternative Dispute Resolution processes such as mediation and collaboration are preferable, particularly if splitting couples want to financially recover more easily from divorce. With court delays and extremely high costs of running trials, you should think hard before going down that track as opposed to looking into ‘arbitration’ which has fixed fees, quick turnaround time, and can focus on the issues the parties decide are relevant. If such cases are run ‘on the papers’ without personal appearance, the costs can be absolutely minimised for parties.
If you would like to discuss whether Alternate Dispute Resolution processes may be a good fit for your circumstances, please contact Canberra family lawyer Cristina Huesch or one of our other experienced solicitors here at Alliance Legal Services on (02) 6223 2400.
Please note our blogs are not legal advice. For information on how to obtain the correct legal advice, please contact Alliance Legal Services.