How divorce can hit your finances
Seniors are not immune from relationship breakdowns. If it happens, you may have to rethink your retirement plans.
Divorce at any time of life can be emotionally and financially challenging. When it happens later in life – as is the case more often these days – it will not only have an emotional impact, but it may also disrupt long-term plans and create financial uncertainty.
The first step to recovery is understanding your financial position post-divorce. This includes:
Taking inventory of all assets, including property, savings, superannuation, and investments, accounting for any debts that must be managed
Reviewing your sources of income, including pensions, superannuation, and part-time work, and compare them to your new living costs
Updating legal and financial documents, including your will, power of attorney, insurance policies, and beneficiaries, reflecting your new circumstances.
Going from a dual-income household to a single-income one means you’ll need to make lifestyle adjustments. This may mean:
Cutting back on non-essential expenses, such as dining out or travel, to ensure your essentials are covered
Downsizing or relocating to a more affordable home to free up equity and reduce ongoing expenses
Checking if you qualify for government benefits, such as the Age Pension or rent assistance.
A divorce settlement may also impact your superannuation balance. To rebuild financial security:
Get professional advice from a registered financial adviser about optimising your investments to align with your new retirement timeline
If possible, consider boosting your super contributions to enhance your long-term financial security
Look into part-time work, consulting, or rental income to supplement savings.
Once the divorce is behind you, you should look to safeguard your financial independence by:
Avoiding impulsive financial decisions: Take time before making major investments or large purchases. Rushing into financial decisions can lead to unnecessary losses.
Being aware of scams: Seniors are often targetted in financial scams. Be cautious with online interactions and unsolicited financial advice. Staying informed can help protect your assets. Visit National Seniors Australia’s Keep Scam Safe page for more.
Focusing on well-being: Financial stability is important, but so is emotional recovery. Seek support from friends, family, or counselling services if needed. Finding ways to rebuild your social connections and support network is just as critical as rebuilding your finances. If you need emotional support, call Lifeline on 13 11 14 or Beyond Blue on 1300 224 636.
While a late-life divorce can be a major setback, proactive financial planning and adjustments can help you regain stability and enjoy a fulfilling retirement.
Disclaimer: This article is for general information only and does not constitute professional advice. You should consider seeking independent financial, legal, or taxation advice based on your personal circumstances.
