Breakdown Shocker

When marriages and de facto relationships fail, the finances of the separated couples are almost always badly damaged. And particularly for older couples, rebuilding personal finances from failed relationships can be particularly difficult, especially for older separated couples.

A recent study, Divorce and the Wellbeing of Older Australians, published by the Australian Institute of Family Studies highlights a particularly shocking statistic: More than a quarter of the population age 55-84 have been divorced. The institute attributes such a large percentage to an extraordinarily high number of divorces in the late seventies, which is “compounded” by the rapid ageing of the Australian population.

The institute studied the probable impact of marital breakdown using information gathered by the Household Income and Labour Dynamics in Australia survey (HILDA).

“Divorce has a long-lasting negative impact on well being and the effects appear to persist later in life for men and women,” according to the study.

Apart from the social and medical effect of divorce, the study emphasises the financial fallout. The financial consequences, of course, are extremely difficult to measure. But just think that savings and possibly earning capabilities are cut in two – not necessarily in equal proportions.

And the sheer number of baby boomers on the eve of retirement or in retirement who have been divorced at least once in their lives is staggering.

It is often said that people should ideally enter retirement with mortgage-free homes and without debts – not to mention sufficient retirement savings. But that can be extremely hard for separated older couples, particularly those whose relationship failed later in their lives.

(Source: Article reproduced in full from Vanguard Investments)

The super self-employed

By Jaeneen Cunningham

A report by the Association of Superannuation Funds of Australia (ASFA) says that Many self-employed Australians remain unprepared for retirement with little or no superannuation or other appropriate savings. According to the chief executive of ASFA, Pauline Vamos, the research has revealed a significant gap in the retirement savings of the self-employed when compared to wage and salary earners in Australia. The report shows that while the self-employed sector makes up over 10 per cent of labour force, 28 per cent of the sector has no superannuation at all, while a further 53 per cent has a super balance of less than $40,000.

We know small business is under greater financial pressure than ever but given the tax incentives aimed at boosting contributions, self-employed people should consider superannuation as part of a strategy to increase their retirement savings. If you're self-employed its imperative you dont let all the years of hard work slip away by not providing adequately for youself in retirement. Look at your expenditure and find a little to make those important contributions now!