Later-life divorces a financial hurdle for New Zealanders

Friday, 3 May 2019

There are still lots of gaps in our understanding of KiwiSaver. First published in 2018.

New Zealanders are divorcing later in life, and it can have serious implications for their finances.

Data out from Stats NZ show the divorce rate fell to 7.7 divorces for every 1000 estimated marriages and civil unions in 2018, the lowest rate since 1977. It is now 40 per cent lower than in 2004.

But when it does happen, divorce is happening later. The median age for women is now 44.4 years, compared to 37.8 in 1996. For men, the median age is now 47, compared to 40.6 in 1996.

It tracks an increase in the median age at marriage, too. In 1989, the median marriage age for men was 28.2. Last year, it was 32.3. For women the age has lifted from 25.8 to 30.7 over the same period.

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Financial adviser Liz Koh said people divorcing later in life were known as 'silver splitters' - usually people whose kids were no longer living with them, and who had little debt and wanted some freedom and independence.

Data out from Stats NZ show the divorce rate fell to 7.7 divorces for every 1000 estimated marriages and civil unions in 2008, the lowest rate since 1977. It is now 40 per cent lower than in 2004.

But she said, the longer couples left it to divorce, the more problems there could be because there were often significant assets involved and sometimes complicated legal structures.

People who divorced when they were older had less time to get back on track for retirement, she said.

'Women can be particularly vulnerable because of their lower future earning potential and higher life expectancy. Perhaps they have taken breaks in their careers to bring up children, or chosen a career path with pay inequity or low remuneration. A property division should take these factors into account but it doesn't always.

'There is little time to recover from a late split before retirement and silver splitters should ensure they get their full entitlement under the Property Relationships Act, taking into account future earning potential. This is no time to allow guilt or a desire to avoid confrontation to take precedence over your financial future.'

Peter Cordtz, Commission for Financial Capability general manager for community, said women entered retirement about 18 per cent wore off than men, on average. They had less resilience to rebound from a shock such as a relationship breakdown.

'My wife, a teacher, took two decades out of the workforce, on and off, to raise our family. That was a decision we made as a couple but now in our early 50s, approaching the empty-nest stage, if it was to end for us it would be much easier for me to restart alone than it would be for her.'

Women also often carried more of the responsibility for care of other family members, which limited their ability to earn and recover financially, he said.

Koh said the reason the median age of divorce was increasing was probably because the marriage rate was declining. The marriage rate is at a new low of 10.8 couples per 1000 people eligible to marry.

Stats NZ said that was a reflection of the population increasing but the number of couples choosing to marry remaining steady.