Silver divorce is on the rise

Despite overall divorce rates declining since the 1990s, both the age at divorce and the rate of divorces among couples in long-term marriages are on the rise. According to data from Australian Seniors and the ABS, 32% of divorces now occur after the age of 50*.

What are some of the key financial impacts of divorce? 

Superannuation is typically regarded as part of the assets in any divorce   financial settlement. It can be divided by court order or by formal agreement between the partners.  Any split super payment remains preserved in the former partners’ respective superannuation accounts until they meet a relevant condition of release.  

While super splitting it isn't obligatory, considering it in the broader financial settlement is vital due to its significant role in overall wealth. 

For many couples, super is looked at as one big nest egg that you’ll share for the rest of your lives. Dividing it up can substantially diminish what was once a solid nest egg, potentially impacting retirement plans.

Think before you split

The process of dividing assets can be difficult. Factors like investment properties, primary residences, or self-managed super funds (SMSFs) with less liquid assets—such as business holdings, real estate, closed funds, or art—can further complicate matters. 

Selling assets without proper advice can trigger capital gains tax, while shifting assets from favourable tax environments like superannuation or trusts may result in hefty tax liabilities.  Centrelink entitlements and thresholds will also alter with your changed circumstances. 

You may need more income as a single

After divorce, with each person potentially having only half of their assets but needing around 70% of their income to cover living expenses, budgets can become tight. 

Many shared expenses, such as utilities, become the sole responsibility of each party post-divorce, which can put an extra strain on budgets. For instance, the Association of Superannuation Funds Australia (ASFA) estimates that the weekly budget for a single retired person aged 65 living a modest lifestyle is around $625.87. This is about 70 per cent of the estimated budget of $900.27 for a similarly aged, retired couple with the same lifestyle. 

Getting your affairs in order post-divorce 

• Ensure you have updated your superannuation death benefit nominations. You may want to change your beneficiaries or lock in a binding nomination if you don't have one. 
• Review your Will and confirm it reflects your current situation. If something were to happen, ensure that the right people inherit your assets.  
  Consider strategies to rebuild or manage retirement savings, investments, and income.
• Be sure to seek advice on Centrelink entitlements. Thresholds can differ, and you might be entitled to benefits you weren't entitled to pre-divorce.
• Evaluate debt. Consider how much, if any, debt you should take on if you plan to re-enter the property market or rebuild assets.

We’re here to help 

Life changes – such as divorce – can be a key trigger to review your financial plan and seek professional advice. 

As a TelstraSuper member you can get general and simple personal financial advice about your TelstraSuper account over the phone at no additional cost – it’s all part of your membership.  

LEARN MORE

For more comprehensive personal advice, you can make an appointment with an adviser from TelstraSuper Financial Planning. They have a range of advice options available for a competitive fee and the first appointment is obligation free. To get started, simply give us a call on 1300 033 166

* https://www.seniors.com.au/, ‘The Australian Seniors Series: Love After 50 Report 2023’, Australian Seniors, 11 December 2023.