Divorce rates in over-65s are rising around the world, including in Australia, and while it’s providing a sense of freedom and a fresh start to many, divorced women are struggling to come to grips with one key issue: finance.
New figures released by UBS Global Wealth Management in April show the majority of married women leave their financial decisions up to their husbands because they believe their spouses know more about such matters.
However, a whopping 98 per cent of divorced women say they regret not being more involved in managing their joint wealth while married, and many now struggle to understand how to manage their money.
What’s more, more than half of divorcees and widows discover financial surprises, such as outdated wills and debts, when their marriages end.
It’s a worrying trend given most women will outlive their husbands, and eventually, it seems, be forced to carry the financial burden on their own.
It’s not just the Baby Boomers who have left the finances to their husbands: Millennial women would also rather their husbands take care of their money. UBS figures showed 61 per cent of Millennial women rely on their husbands to manage their finances, compared to 54 per cent of females from older generations.
“The twin forces of longer life expectancies and high rates of divorce have produced a sobering likelihood, that more women will end up alone and solely responsible for their financial well-being,” said Paula Polito, global client strategy officer of UBS Global Wealth Management.
“What’s most concerning is that women are more educated, successful and outspoken than ever, yet 60 per cent continue to abdicate important financial decisions that affect their future.”
Divorced Women Often Worse Off
This latest report back up a recent Australian survey by the Australian Financial Attitudes and Behaviour Tracker that found 46 per cent of women surveyed found dealing with money stressful and overwhelming. Only a quarter 26 per cent of men felt the same way.The Australian Institute of Family Studies has analysed data from the Household, Income and Labour Dynamics in Australia (HILDA) Survey, which has collected information from thousands of Australian households every year since 2001.
The Institute’s Deputy Director, Dr Matthew Gray, said the paper found that divorce had lasting impacts on women’s income levels (income adjusted for changes in household size following divorce), and the degree of hardship they experienced.
“The study shows that divorce has a substantial negative impact on the incomes of women, and almost no impact on the incomes of men after adjusting for changes in household size”, Dr Gray said.
“While this has been established in other studies, our study looks beyond income levels, and over a seven-year period compares divorced women not just to men but to other women, in order to get a better picture of the long-term financial impacts of divorce.
“The findings paint a bleak picture of the financial cost of divorce to women and their children.
“But what is also clear from the study is that there are several important factors that will reduce the likelihood of increased financial hardship and prosperity after divorce.
“For women, higher pre-divorce income, being in paid employment, control over financial decisions pre-divorce, and stability of income are important factors in mitigating the negative financial impact of divorce,” Dr Gray said.
In the year immediately after divorce, women’s income declined while men’s stayed the same (after adjusting for changes in household size). While women’s income recovers over time, compared to the incomes of non-divorced women, they are still significantly behind.
Four years after divorce, women experienced a 2.9% increase in income from pre-divorce levels compared to an increase of 12.3% for non-divorced women. For divorced men, income increased by 12.5%.
If your former partner was the one who took care of the money, you will need to find out how things were organised and decide how you want to manage your finances. Focus on setting yourself up for the future. Here are some things you can do to protect your finances:
- Close off your joint accounts – Consider closing your joint account. Talk to your bank to establish your own account with your own pool of money, and make sure the other joint account holder can’t access it. Check that your pay is going into this account
- Do a financial stocktake – List all your assets, and any debts or joint debts in your name with our asset stocktake calculator.
- Record your turning points – Note down the dates of your separation in a diary or notepad. You can use this when you apply for a divorce as proof that you have been separated for at least 12 months.
- Cancel your redraw facility – Talk to your bank to cancel any redraw facility on your home loan to make sure your debts don’t grow.
- Update your rental agreement – If your name is on the lease then you are liable for any unpaid rent or damage caused by your partner.
- Update your utility bills – If your name is on the account then you are liable for any unpaid bill.
- Seek legal advice – Speak to a solicitor about separating property held in joint names, taking legal action, if property is held in your partner’s name, to prevent it being sold before the property settlement, and to update your will
For assistance with separation and divorce, contact our friendly team of family lawyers today. We offer a free, 10-minute phone consultation.