The warmth of January doesn’t always extend to our relationships. The New Year can be a peak period for divorce lawyers as couples call it quits after sharing one last Christmas together.
No matter whether starting afresh as a newly single person brings heartache or a sense of relief, the fact is, separation and divorce can be financially devastating. A new study by AMP.NATSEM found it can take five years for couples to recover their financial position following a relationship breakdown.
I freely admit I’m no marriage counsellor but in my role as a financial planner I have worked with clients trying to rebuild their financial lives following separation and divorce. I know from their experiences just how challenging it can be.
AMP.NATSEM’s recent report titled “For Richer, For Poorer: Divorce in Australia”, confirms that divorce not only decimates personal savings and assets, it also threatens the ability of many people to get back into home ownership and accumulate a decent pool of superannuation – two valuable pillars of financial security.
Part of the problem is that the peak years for divorce tend to lie between the ages of 45-64, a life stage when we are often at the height of wealth accumulation though with less time in the workforce to rebuild our finances following a major shock.
Understandably, divorce is something we don’t normally plan for. However, at a time when emotions are running high, it can be easy to overlook the financial aspects of a separation – or take a rushed approach simply to put it all behind you and move on.
The key thing to bear in mind is that decisions made regarding a property settlement can impact you for many years to come, and this is one area where it pays to invest in good advice.
If the start of 2017 sees you at a crossroads in your relationship, I reckon it’s worth seeking professional support before making a final decision on the future of the relationship. Organisations like Relationships Australia provide low cost counselling services, and talking the issues through with an independent third party could save your relationship.
If you’re absolutely sure the right course of action is to go your separate ways, make a date to speak with a lawyer – preferably a family law specialist. Many legal firms also have informal links with financial planners, and knowing where you stand both legally and financially can give you a more complete picture of what steps to take now, and what may lie ahead.
AMP.NATSEM found laying these sort of foundations could shave a year off the five-year recovery period. It may not ease the emotional distress but you’ll be taking important steps to rebuild a secure financial future.
Paul Clitheroe is a founding director of financial planning firm ipac, Chairman of the Australian Government Financial Literacy Board and chief commentator for Money Magazine.
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See the findings from the latest AMP.NATSEM report, which looks at the financial implications of a marriage breakdown.