Divorce doesn’t just take an emotional toll on families – it also leaves couples in financial turmoil. And a new report reveals it takes Australian divorcees at least five years to get back on their feet.
Yesterday, AMP released the findings of its 39th AMP/NATSEM report, Divorce in Australia: For Richer, For Poorer. The report looked at the lasting financial effects of divorce and reveals that as well as taking divorced couples five years to regain their financial footing, it also has serious consequences for living standards and retirement income later in life.
Data from the National Centre for Social and Economic Modelling shows that one in three marriages end in divorce, costing Australians $14 billion in 2014. Complicated divorces don’t just hit the wallet hard, they also make future home ownership extremely difficult, tend to sap superannuation savings and influence education outcomes for children.
AMP Chief Customer Officer Paul Sainsbury says that divorce comes as a massive hit to those who don’t see it coming.
“Understandably, most couples don’t plan for divorce. This lack of planning, combined with the significant disruption and emotional stress of a divorce, often means finances are a lower priority and mishandled during a separation.
“And with Australians now tending to divorce later during our mid-40s and prime wealth-accumulating years, the long-term impacts can be considerable,” he says.
The report found that even five years after a divorce, home ownership remained out of reach for many divorced people, particularly parents. Single mothers were found to be hit the hardest by financial issues, with 40 per cent of divorced mothers still living in rental accommodation five years after a marriage breakdown. This is compared to 32 per cent of divorced fathers. Home ownership rates were 15 per cent lower overall for divorced couples.
The report details how newly-divorced mothers spend about 66.4 per cent of their household budget on basic but important items, such as groceries, clothing and household bills. Meanwhile, married mothers and fathers spend about 54 per cent of their household budget on these items.
Key findings of the 39th AMP/NATSEM:
- Divorced parents aged between 45–64 years of age have 25 per cent fewer assets than those who are still married.
- Divorced fathers aged between 45–64 years of age have 60 per cent less super than married fathers five years after a marriage breakdown.
- Super balances for divorced mothers are 68 per cent lower than those of married mothers. On average a divorced mother has 37 per cent less super than a divorced father.
- More than 20 per cent of newly-divorced mothers struggle to afford basic items for children, including school uniforms and leisure activities.
When it comes to influencing education outcomes for children, Professor Laurie Brown says the effects of divorce can seriously derail a child’s education.
“A family breakdown decreased a child’s chance of getting a university education by 6 per cent,” she said.
Have you experienced similar struggles when it comes to surviving a divorce? What services do you think should be available to assist divorced couples?
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