Money and Life
(Financial Planning Association of Australia)
Divorce is the leading cause of financial hardship for women1. So itâs important to take control of your money and plan for a time when you may become financially independent.
According to a 2014 survey of over 2,000 women conducted by RMIT, 59% have experienced financial hardship as a result of divorce2Â and 80% chose providing for their family as a top financial priority. Only 50% considered a comfortable retirement an important financial goal3.Â So, these issues are compounding the deeper, systemic issue of aÂ gap in womenâs earningsÂ and retirement savings thatâs cumulatively forcing some women into severe poverty in their senior years.
2016 Financial Planning Week Ambassador Jane CaroÂ recently stated that women over 55 are the fastest growing demographic among homeless people in Australia4. This is a really alarming indicator of the financial hardship older women are facing. Itâs also a signal for women of any age to take charge of their financial wellbeing, so they can be ready for whatever the future may hold.
The super gap â how much is it?
We knowÂ women are still earning lessÂ across the board than men. And theyâre also most likely to be the ones taking time out from their career to care for children and other family members. These are two of the reasons why women can expect to retire with around half the super balance compared with men. Figures from the Association of Superannuation Funds of Australia (AFSA) show the average super balance for women at retirement is $138,150 and $292,500 for men.5
When you consider AFSA expects a single person in retirement to live on a budget of $24,108 a year6Â â and thatâs just for a âmodestâ lifestyle â a $138,150 nest egg isnât even going to last a decade. And that budget doesnât include rent or mortgage repayments. So if you donât own your home outright, itâs going to be even harder to make ends meet in retirement.
The fallout from divorce
Losing out on owning a home can be one of the many financial consequences of a divorce. After you and your ex have split your assets, you may not have enough left over to buy property in the suburb you call home. Or you may scrape enough for a deposit, but youâre starting all over again with a 25 or 30-year mortgage to repay.
This is just one of the financial setbacks women can expect to experience when their marriage breaks up. In their recentÂ Divorce: For Richer, For Poorer report, AMP and the National Centre for Social and Economic Modelling (NATSEM) found the average divorced women has assets valued at 90% less than her married counterpart and can expect to be earning 10% less as well.7
If youâre currently single, or think of your relationship as rock solid, itâs still really important to plan for your financial future as an independent woman. Happily married, or single, women can face financial hardship because of illness or bereavement too. And thereâs plenty of help available to get you up to speed on important money matters including debt, insurance, investment and superannuation.
In May 2015, ASIC launched a newÂ Womenâs Money ToolkitÂ to guide women through important financial decisions and support them towards better outcomes for their financial wellbeing. It deals with all kinds of topics from having kids to managing finances in a relationship and you can tailor the content to suit your life stage and circumstances.
If youâre a woman living in a regional area of Australia you may have already come across the Regional Womenâs Financial Literacy Project.
Seeking financial advice from someone who really understands how to support you to make the most of your money, even when youâre not earning much, can make an important difference to your financial stability and wellbeing.
Whether youâre getting married or divorced, starting a family or retiring, a CERTIFIED FINANCIAL PLANNERÂŽ professional can offer valuable advice on preparing for a secure financial future.Â Find a local CFP professional today usingÂ Match My Planner.
For more tips and tricks on how to manage your money, avoid mistakes that can derail your financial future, and secure your financial freedom, downloadÂ our free eBook.
1RMIT Survey Women and Money across the generations, 2014, page 23Â http://www.financialliteracy.gov.au/media/558801/women-and-money-across-the-generations.pdf
2Â RMIT Survey Women and Money across the generations, 2014, page 23Â http://www.financialliteracy.gov.au/media/558801/women-and-money-across-the-generations.pdf
3Â RMIT Survey Women and Money across the generations, 2014, page 16Â http://www.financialliteracy.gov.au/media/558801/women-and-money-across-the-generations.pdf
4Sydney Morning Herald, âGetting sound financial advice is crucial for us all, but especially for womenâ Jane Caro, 22 August 2016,Â http://www.smh.com.au/lifestyle/news-and-views/opinion/getting-sound-financial-advice-is-crucial-for-us-all-but-especially-for-women-20160821-gqxwug.html
5ASFA Research and Resource Centre, Superannuation Account Balances by Age and Gender, December 2015, page 3,Â https://www.superannuation.asn.au/ArticleDocuments/359/ASFA_Super-account-balances_Dec2015.pdf.aspx
6AFSA Retirement Standard, December Quarter 2016Â https://www.superannuation.asn.au/resources/retirement-standard
7Sydney Morning Herald, Women with children biggest financial losers of divorce: report, Daisy Dumas, 13 December 2016,Â http://www.smh.com.au/lifestyle/news-and-views/news-features/women-with-children-biggest-financial-losers-of-divorce-report-20161212-gt92op.html