Divorce Hits Our Older Population

AS THE foot soldiers of the post-1975 divorce boom enter retirement, a landmark study shows many still suffer the financial effects of marriage breakdown. People aged 55 to 74 who have been divorced are on average worse off than their married peers who stayed together. The research, by the Australian Institute of Family Studies, shows remarriage can significantly improve finances of the once-divorced. But their home ownership rates in later life remain substantially lower than for couples who never divorced, and they are much more likely to be paying rent. The study, based on a sample of 2236 people aged 55 to 74, is the first to cast light on the financial legacy of having been divorced. David de Vaus, professor of sociology at La Trobe University and the lead author, said the dramatic increase in once-divorced baby boomers reaching retirement would have major implications for the nation’s retirement income system.

They were the first generation to live through the era of high divorce rates ushered in with the Family Law Act 1975.”More and more people will carry into their later life the financial effects of divorce in terms of home ownership, assets and income,” Professor de Vaus said. The study reveals home ownership is the biggest financial advantage enjoyed by never-divorced couples, with rates of about 74 per cent for men and women. Even when the divorced remarry, only 57.8 per cent of the men and 61.8 per cent of the women later owned their home. On other measures, however, divorced men who remarry, on average, catch up to or even overtake their never-divorced male peers, possibly because “they were financially so far behind they are flat out trying to make it up, or because it is the wealthier divorced men who can remarry,” the professor said. They have similar assets, and somewhat higher incomes and superannuation than the never-divorced men. Divorced men and women who remain single into later life suffer the biggest disadvantages. One-third of the divorced, single women said they had experienced financial hardship in the previous year, compared with only 8.4 per cent of never-divorced women; one-quarter of single divorced men compared with 10 per cent of never-divorced men had experienced hardship. “If you divorce and stay single you don’t recover financially,” Professor de Vaus said.

Previous research has shown women are the biggest financial losers from divorce. But while this is true in the short term, he said, the new study, The consequences of divorce for financial living standards in later life, shows by later life the gender difference among single divorcees disappeared. Older single divorced men are worse off by some measures, it shows, probably explained by their low education levels: only 4 per cent had a degree compared with 26 per cent of the single divorced women. Only 40.9 per cent of single divorced men aged 55 to 74 owned their house outright, compared with 49.4 per cent of single divorced women and about 74 per cent of never-divorced men and women. Single divorced men had the lowest income ($15,500 compared with $22,000 for the single women), and received the highest level of government benefits.