A recent report from the Australian Institute of Family Studies showed that divorce has a significant financial effect, often causing a lack of funds upon which to retire.
Australia (PRWEB) August 23, 2012
A recent report from the Australian Institute of Family Studies showed that divorce has a significant financial effect, often causing a lack of funds upon which to retire. The report is based on analysis of the Household, Income, and Labour Dynamics in Australia survey, and shows that, while men are affected more emotionally, women suffer greater financial impact.
According to the study, in the first year after divorce, women’s income decreased by an average of $10,000, while it increased by an average of $7,000 in men. After six years, women were making $3,000 more than what they originally made, while men made $13,000 more.
While these numbers look encouraging after six years, the good news is more than counterbalanced by the severe drop in assets. According to the study, assets of divorced people average between $360,000 and $390,000 less than those of people who haven’t divorced.
Dr Lixia Qu, senior research fellow for the Australian Institute of Family Studies, had this reply when asked about how divorce affects retirement: “Divorce has a big impact on both men and women whose assets continue to fall behind married households.”
She would go on to say that those who didn’t remarry had to live on significantly less retirement income, often becoming “more reliant on government support to get by.”
The problem is mathematical. Two people can live in the same size house as that of one person. Often, housing, utilities, and transportation costs are very close to being the same for one person that they would be for two, but a divorced person who remains single only has one income to use in paying those costs. For women with dependent children, the numbers are far worse, and they find it even harder to go ahead.
David Domingo, CEO of Members Alliance, had this response: “This study is an eye-opener for many, but it merely confirms what we have known anecdotally for years: it is a lot more difficult for a divorced person to retire than it is for a married couple. It’s a matter of simple mathematics: a two-income household can amass a much bigger nest egg than a household with only one person.“
He went on to elaborate: “Divorce is so unpleasant that most people don’t fully understand how it can follow them all the way through retirement if they aren’t careful. Luckily, sacrificing immediate cash flow for future financial planning can provide a very nice retirement for someone who is divorced, if the situation is addressed soon enough.”
Members Alliance Australia is an established finance specialist organisation serving private and business clients since 2005. They are experts at balancing cash flow with correct structure to help ensure that their clients maximise their retirement funds. They also specialise in property investment, debt conversion, debt reduction, financial risk management and wealth creation.
Do you want to have a comfortable retirement? Contact Members Alliance today – call them at 1300 365 731 or visit their website for more information: http://www.membersalliance.com.au/about-us/testimonials.