Divorce legacy lingers in older age

Divorce legacy lingers in older age

Media Release — 26 July 2018

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Many older age Australians who have experienced divorce are substantially less well off financially than people who have stayed married, according to new analysis by the Australian Institute of Family Studies.

The study found divorced people aged between 55 and 74 years had less household disposable income and fewer assets than married couples the same age.

The national study examined the financial consequences of divorce for 2,000-3,000 older Australians each year between 2001-2016. During this period, there was a 10 per cent increase in people experiencing divorce among this age group.

Australian Institute of Family Studies Director, Anne Hollonds said the study focused on people who had divorced on average 15 to 20 years ago and found their finances remained in a weaker position than their married counterparts.

“Our analysis shows that divorced men and women have less household disposable income than their married counterparts at this later stage in life. On average divorced single men were $10,000 worse off and divorced single women were $6,300 worse off over the 16 years,” she said.

“Divorced men and women were also worse off in terms of household assets in these later years and on this financial measure the gap appears to be widening.

“Even older divorced men and women who had remarried were falling behind in their asset levels in recent years, compared to couples who had stayed married.

“Married people who had never divorced increased their assets at a faster rate than either single divorcees or those who had later remarried.

“While household income levels can recover relatively quickly, it takes a longer period for assets like housing to appreciate in value.

“Interestingly, men and women who had subsequently remarried were generally able to restore their income levels to match or even better those who had stayed married.”

AIFS Senior Researcher and Demographer, Lixia Qu said education levels could be one factor behind why some older people were able to recover their financial position post-divorce more quickly than others.

“Our analysis shows education levels among older men and women who had stayed married had more than doubled over the past 16 years, whereas educational levels for older divorced people had only increased marginally or remained static.

“Another contributing factor could be that older married women achieved higher rates of employment, compared to their divorced contemporaries.

“This doesn’t mean that all older divorcees are experiencing financial difficulties simply that their married counterparts have been able to build up higher levels of income and assets.”