Retirement - Doing it Solo
With divorce rates rising among couples aged 55+, more people could find themselves going it alone in retirement. We explore the pros and cons for your lifestyle and finances and speak to Dianne Kemp about her experience of planning for retirement after divorce.
While divorce rates have fallen in Australia in recent years, there is one age group where it’s becoming more common. In the two decades to 2017, the divorce rate for men aged 55-59 more than doubled. For women in the same age group it has tripled. Although some of these people may re-partner or remarry before retirement, others will be facing this life stage as a free agent, with all the uncertainty that brings.
For women approaching retirement, divorce can potentially introduce greater financial insecurity into their lives. In a 2018 report from Monash University and Australian Super, 40 women were interviewed about their financial situation in retirement. 45% of interviewees had been divorced at least once, often with significant impact on their finances. This was particularly the case for women who had taken on the lion’s share of childcare and household tasks, with limited opportunities to work and save for retirement as a result. After a divorce they no longer have their partner’s financial assets and income to rely on in their retirement years and little in the way of savings or assets of their own.
Retirement + divorce
Not only can divorce be disruptive to lifestyle and finances in the lead up to retirement, but it can also ambush the best laid plans for life after work. “I’d been married for 35 years, and our second child had just left to start university when we decided to relocate from Cairns to Mackay,” says Sarah. “After the move, my husband met somebody else. We tried to reconcile but eventually went our separate ways. I found myself single again at age 65, which meant a lot of unexpected decisions about my future and finances.”
Independence - the pros and cons
Although Sarah had made the move to Mackay expecting to continue life as part of couple, she was quick to adjust to her new situation. “The minute I walked out and said it’s done and dusted a huge relief came over me,” says Sarah. “Being able to make choices and plans based on my own wishes was a really good outcome.” But Sarah also needed to adjust to meeting her needs and enjoying life on just one income.
Living as a single person generally costs more than half what you’d spend as a couple. Many essential costs – rent, utilities, running a vehicle – are the same whether you’re living alone or with someone else. This is why estimates for retirement income from the Association for Superannuation Funds of Australia (ASFA), and Age Pension rates, are more per person for singles than couples. It’s pretty unlikely that you’ll be able to cut your living expenses in half just because you’re living on your own.
Sarah has found that her personal expenses are higher overall as a single person, but says the extra cost is more than worth it in her case. “Being single might cost you more day-to-day,” says Sarah. “But for me it’s a small price to pay for my wellbeing and feeling positive about the life I’m living.”
Making the most
Having said this, Sarah is quick to acknowledge that she hasn’t had to ‘do it tough’ with her finances as other women in her situation have. “I hadn’t worked for years so earning an income at 65 would have been a big challenge,” she says. “Fortunately, I had a decent amount from the sale of our house in Cairns. But I knew that it wouldn’t last unless I made smart choices. So, I went to see a financial adviser who had provided really sound advice to my parents. Together we decided that I would invest in a managed fund and the income from that, with a part Age Pension, would be enough to cover my rent and other living expenses.”
Sarah says her sense of security at this time of transition came from two things – having a financial plan that allowed her to earn an income without touching her lump sum and making the most of her lifelong budget habits. “I’ve been accustomed to having a budget to stick to all my life,” she says. “It’s a habit that’s good to have when you’re single, with nobody to fall back on to make sure bills are paid.”
Becoming single hasn’t been the only important turning point in Sarah’s life in the last decade. She’s met a new partner, David. Sadly, she’s also had to farewell her mother who passed away recently. Both these changes have meant making new choices about her financial circumstances and living arrangements.
“Buying a home with David was a big decision and soon afterwards, I was left some money by my mum,” says Sarah. “Losing Mum was terrible, but it’s given me an opportunity to invest in a property, so I continue to have an income. If something should happen to David and I’m on my own again, it’s somewhere I can move to as it’s right on the golf course where I love to spend time. Each time I’ve been thinking through my options, I’ve sought advice from my financial adviser. It really helps to have an independent voice to guide you when you’re looking to set yourself up for the future.”
 Australian Bureau of Statistics, 3310.0 – Marriages and Divorces, Australia, 2017, Crude divorce rate, Australia, 1997-2017, 27 November 2018, https://www.abs.gov.au/ausstats/abs@.nsf/Latestproducts/3310.0Main%20Features42017?opendocument&tabname=Summary&prodno=3310.0&issue=2017&num=&view=
 Australian Bureau of Statistics, 3310.0 – Marriages and Divorces, Australia, 2017, Age-specific divorce rates(a), Australia, Selected years, 1997–2017(b)(c), 27 November 2018, https://www.abs.gov.au/ausstats/abs@.nsf/Latestproducts/3310.0Main%20Features42017?opendocument&tabname=Summary&prodno=3310.0&issue=2017&num=&view=
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