Counting the cost of 'grey' divorce
One of the saddest personal finance stories of the year is a recent piece in The New York Times about the growth of what the author calls "silver or grey divorces".
These divorces involve couples who have been married or in a de facto relationship for 30 years or so who make a decision to separate when close to their retirement or in early retirement.
The article quotes statistics from the National Centre for Family and Marriage Research in Ohio stating that people aged over 50 were twice as likely to divorce in 2014 than in 1990. And the increase was even higher for those aged over 65.
How does the Australian experience with grey divorce compare?
The latest-available divorce statistics from the ABS show that the rate of divorce among those aged over 55 has increased by 80 per cent for men and 68 per cent for women during the 20 years to 2013.
It should be emphasised, however, that the average age for divorce in Australia was 43.5 years in 2013 - up from 37.9 years over two decades.
Certainly, the rate of divorces becomes lower as couples age. Yet the statistics indicate that while divorce rates have tended to plateau for middle-aged and younger couples, the rate of divorce for those over 55 has risen.
Overall, ABS statistics based on marriages and divorces in 2013 suggest that more than 40 per cent of marriages will end in divorce. (Significantly, none of these divorce figures include de facto relationships.)
Sadly, one of the greatest destroyers of personal wealth is the breakdown of marriages and de facto relationships.
Separation means that a former couple's assets - including the family home, their superannuation and their other investments - are split. Solely from a retirement perspective, a relationship breakdown means that not only are retirement savings divided but each person has to pay for separate accommodation.
Many separated individuals, of course, can no longer afford to own a home. And the reality is that it typically costs much more to finance the retirement of two single people than a couple.
Further, it can be extremely difficult for separated older spouses to rebuild their retirement savings. And this task can be even tougher for an individual if his or her partner had much of the control over family finances during a long relationship.
With the rapid ageing of the population together with seemingly ever-increasing longevity means that the rate of divorces among retiring baby boomers is likely to keep climbing.
This expectation underlines the desirability maximising retirement savings while still in the workforce and for both partners in a relationship to save as much as possible in super.
Sound personal financial practices include preparing for the unexpected and gaining quality professional advice when appropriate.
By Robin Bowerman
Smart Investing
Principal & Head of Retail, Vanguard Investments Australia
05 November 2015
Hot Issues
- ATO encourages trustees to use voluntary disclosure service
- Beware of terminal illness payout time frame
- Capital losses can help reduce NALI
- Investment and economic outlook, August 2024
- What the Reserve Bank’s rates stance means for property borrowers
- How investing regularly can propel your returns
- Super sector in ASIC’s sights
- Most Popular Operating Systems 1999 - 2022
- Our investment and economic outlook, July 2024
- Striking a balance in the new financial year
- The five reasons why the $A is likely to rise further - if recession is avoided
- What super fund members should know when comparing returns
- Insurance inside super has tax advantages
- It’s never too early to start talking about aged care with clients
- Capacity doubts now more common
- Most Gold Medals in Summer Olympic Games (1896-2024)
- SMSF assets reach record levels amid share market rally
- Many Australians have a fear of running out
- How to get into the retirement comfort zone
- NALE bill passed by parliament
- Compliance focus impacts wind-ups
- LRBA interest rates increase for 2025
- Income-free areas set to increase from 1 July
- Most Spoken Languages in the World
- Middle-to-higher incomes boosting SMSF growth
- Investment and economic outlook, May 2024
- Transitioning into retirement: What you should know
- Plan now to take advantage of stage 3 tax cuts
- Deeming freeze a win for Age Pensioners
Article archive
- April - June 2024
- January - March 2024
- October - December 2023
- July - September 2023
- April - June 2023
- January - March 2023
- October - December 2022
- July - September 2022
- April - June 2022
- January - March 2022
- October - December 2021
- July - September 2021
- April - June 2021
- January - March 2021
- October - December 2020
- July - September 2020
- April - June 2020
- January - March 2020
- October - December 2019
- July - September 2019
- April - June 2019
- January - March 2019
- October - December 2018
- July - September 2018
- April - June 2018
- January - March 2018
- October - December 2017
- July - September 2017
- April - June 2017
- January - March 2017
- October - December 2016
- July - September 2016
- April - June 2016
- January - March 2016
- October - December 2015
- July - September 2015
- April - June 2015
- January - March 2015
- October - December 2014
October - December 2015 archive
- Should we expect stormy skies or sunshine in 2016?
- Merry Christmas and Happy New Year 2015
- There's no one-size-fits-all retirement income
- Market Update – 30th November 2015
- Diversifying and cutting costs with ETFs
- Why the ATO’s new powers make SMSF compliance more important than ever
- 'Unretiring' retirees
- The detrimental impact of poor SMSF record-keeping
- Counting the cost of 'grey' divorce
- Combining total-return investing with realistic investment expectations
- Market Update – 31st October 2015
- Another telling reminder for SMSF trustees
- Death in paradise – or your SMSF
- Elderly exploited for assets
- Intergenerational challenges for retirement saving
- Death benefits – navigating the minefield
- Strategy over structure
- Market Update – 3oth September 2015
- SMSF and limited resource borrowing – a warning
- External partnerships and the in-house asset rules
- Take a closer look at SMSF age demographics