Once perhaps thought the domain of younger couples, Australia has seen an explosive rise in the phenomenon of “grey divorce” – a term that refers to people over the age of 50. While the rates of divorce for people in their 30s and 40s have decreased, the rate of divorce for people aged 50 or over has increased. Between 1985 and 2005, the divorce rate for people aged over 60 had increased by 70%.
Social researcher Mark McCrindle says the trend reflects the increasing age of brides and grooms when they marry. “We’ve seen the average age of marriage get later and people divorcing later.”
Often the trigger for a divorce in later years is the children leaving the home and the couple find they have nothing in common or are unwilling to live the rest of their lives in an unhappy marriage. Baby boomers are also far less likely to view divorce with the stigma that had been associated with it in previous generations.
Research from the United States shows that people over the age of 50 are twice as likely to divorce as their forebears and that 1 in 4 people going through a divorce today are over 50. But some of the most serious implications of divorce over the age of 50 are the financial ones.
Unfortunately, the opportunities to rebuild wealth after divorce are limited. People over the age of 50 have fewer years left to accumulate wealth back to pre-divorce levels. Older people will also have more trouble obtaining new home loans because of their limited time left in the workplace. Women who may have devoted many years to raising a family may find themselves in a position where they are unable to support themselves.
As a result, the superannuation of the spouse who has worked will take a hit. Typically one spouse has worked more than the other, who might have taken a break to raise children. Or one partner has always earned more than the other. Superannuation is split during divorce, and by the age of 50, this is likely to be a substantial asset. It may mean adjusting expectations of retirement income after divorce.
A refusal to give up the family home can lead to an asset-rich but income-poor retirement. The largest asset most couples own is their family home. But upon divorce, it can be too expensive for one person to maintain. There is no point in having a home but being unable to pay daily living expenses. Unfortunately, couples may also forget to update estate planning. A couple might have made wills years ago, but forget when they divorce to update their wills. There is also the potential for one spouse to remarry, which means that new estate planning arrangements will have to be made.
Grey divorce can be unfortunate and result in a whole new set of expectations around lifestyle being created, and we have complied some tips below to help smooth down the process.
Tips for Grey Divorce
First, it is recommended that you seek legal help while dealing with a grey divorce. Seeking legal help will help you understand the legal implications of what is likely to be a complex divorce. Most older couples have accumulated a reasonable asset base and the financial settlement is likely to take some negotiations You should also consider seeking financial advice, particularly in relation to your superannuation. You’ll probably have a decent amount, but your strategy may have to change. This applies to both you and your ex-partner.
However, court should be always considered as a last resort. The process of going to court can be long and difficult for all parties. Therefore, talk to your lawyer about mediation. This procedure saves a lot of money and the process is a lot less tiring than court.
When in mediation, it’s important you don’t just consider the finances you’ll need for your current circumstances. Instead, begin to look ahead. You will need to have money in your super when you retire and you will also need to have enough to pay taxes and bills. Therefore, holding onto a large, expensive family home may not be the wisest idea. If your children have moved out, perhaps downgrading is a safer move.
It is very important to keep in mind that your lifestyle may take a dramatic shift. You may need to begin budgeting to ensure you have enough money saved. You may need to start considering getting a job to ensure you can support your new lifestyle change. Divorcing later in life can affect you more deeply that you thought, and it is best you ensure you are prepared.
And if you’ve just been through a divorce, make sure you update your estate planning. The last think you’ll want is for your assets to go to your ex-spouse if you should pass away!
If you are seeking any legal advice to assist you through your grey divorce or estate planning, contact Mitchell’s Solicitors today. We offer a free 10 minute phone call.