Retirement – When “I Do” becomes “I Don’t”

Divorce can be one of life’s most stressful events, and for Australians over 50, it often comes with added financial challenges—especially when it comes to retirement. Many people expect to retire comfortably after decades of work, but divorce can disrupt these plans, reducing savings and creating new financial pressures.

If you’re going through a separation or have recently divorced, it’s important to understand how it might impact your retirement and what steps you can take to secure your financial future.

How Divorce Affects Retirement Savings:

1. Splitting Superannuation

In Australia, superannuation (super) is considered part of the property settlement in a divorce. This means it can be divided between both partners, even if only one spouse contributed to it. The court may decide how the super is split, or you and your ex-partner can agree on a division.

For many people over 50, super is a significant part of their retirement plan. Losing a portion of it can mean delaying retirement, reducing lifestyle expectations, or working longer to rebuild savings.

2. Reduced Household Wealth

Divorce often results in selling the family home and dividing assets. This can be financially disruptive, particularly if you were planning to downsize later in life and use the extra money to fund your retirement.

Living alone also means covering all household expenses—mortgage or rent, utilities, and groceries—on a single income. This can drain savings faster than expected.

Changes to Retirement Plans:

1. Delayed Retirement

Many divorced Australians over 50 work for longer than planned to rebuild their retirement savings. The Association of Superannuation Funds of Australia (ASFA) estimates that a single person needs around $50,000 per year for a comfortable retirement. Without careful planning, divorce can significantly impact whether this goal is achievable.

2. Need for Extra Income

Some retirees take on part-time work or start small businesses to supplement their super and savings after divorce. Others may consider renting out part of their home or look into government assistance such as the Age Pension to help cover living costs.

3. Downsizing or Moving

Selling a larger home and moving to a more affordable property is a common strategy to free up funds for retirement. However, the emotional attachment to the family home can make this a difficult decision.

Protecting Your Financial Future After Divorce

If you’re over 50 and facing divorce, taking action early can help secure your retirement. Here are some key steps:

1. Get Professional Advice

Speaking with a Financial Adviser and a family Lawyer can help you understand your entitlements, options, and how to best manage your assets.

2. Review Your Superannuation

  • Check how much super you have and what will happen if it’s split.
  • Consider making extra contributions to rebuild your balance.
  • If eligible, see if you can claim the government co-contribution to boost your super savings.

3. Update Your Will & Insurance

Divorce means your financial situation changes, so it’s important to:

  • Update your will and beneficiaries on super and insurance policies.
  • Review any life insurance or income protection plans.

4. Reassess Your Budget

  • List all new expenses and adjust your spending and savings goals.
  • Avoid rushing into major financial decisions while emotions are high.
  • Consider seeing a financial counsellor for guidance.

5. Explore Government Support

If your savings are lower than expected, you may be eligible for:

  • The Age Pension or other government assistance.
  • Lower-cost housing options, such as over-50s retirement villages.

Final Thoughts
Divorce can create uncertainty about retirement, but with careful planning, it’s possible to rebuild financial stability. While it may mean adjusting your expectations, taking proactive steps—like seeking financial advice, reassessing your budget, and making informed decisions about your assets—can help you regain control and look forward to a secure retirement.

If you’re facing divorce and concerned about your financial future, start planning today. The earlier you take action, the better prepared you’ll be for the years ahead. Get in touch with our Financial Planning Team if this is something that you want more information on:
e: richard@highview.com.au
p: 5990 1000

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