Financially fit, fierce and fabulous after divorce
REGAINING financial control after divorce can be a daunting task - especially as a senior.
The latest AMP.NASTEM report - For Richer, For Poorer: Divorce in Australia - found the breakdown of a marriage can set individuals back five years financially. But it doesn't have to be that way. It is also a chance to reinvent yourself, set new goals and live the life you want. Empower yourself to make the most of your new life and set up for a prosperous future by following these finance tips:
Work it out
First things first - regroup by working out your financial commitments. Don't assume all your expenses will be halved because you are suddenly single. The reality is they may only drop by 25% because your outgoings, including bills, will remain largely the same, minus a second income. If money is tight, it is never too late to have a second career or part-time job. If you're not working, make sure you utilise all discounts available to seniors and shop around for better deals.
If your children are still at home, it's unlikely you'll be able to downsize your house immediately. Staying on top of house maintenance and fixing issues as they arise is a good way to maximise value and ensure your home is real estate ready when the time comes to sell. However,be objective about the reason you are hanging on to the family home. Is it practical or emotional? If it is emotional, it may not make good financial sense.
If you've acquired an investment property through your divorce settlement, set up a meeting with your property manager to find out as much information as you can about the lease agreement. Get the right advice before deciding to sell or keep the property as there could be hidden tax benefits.
Sort your super
If you've received some superannuation in your divorce settlement, it's a good idea to consolidate this into your own super account to save on fees.
Superannuation is a key part of retirement planning. You are now responsible for what your retirement looks like - and you can't rely on pooling your nest egg with someone else. Even if you do find another partner in the future, it's wise to boost your super balance right now.
Compound interest is the eighth wonder of the world so consider salary sacrificing if you are still earning an income to feather your nest.
If you are already retired, review your super position and pension to ensure you are getting all your entitlements from Centrelink.
You may be entitled to some benefits such as rental assistance.
Protect your financial security by updating your insurances, including property, income and health. As you can no longer rely on a second income, make sure you review the amount of income and total permanent disability insurance you are covered for. A financial planner can help you work out the best coverage to protect yourself and children in the event of illness or death. You may also need to change your family private health plan to single coverage.
Estate planning is a critical aspect of re-inventing your finances after a marriage breakdown. Unfortunately divorce doesn't revoke a will so it pays to visit your lawyer to have this document updated immediately. Not only will you have to update your beneficiaries, you will have to take stock of your estate - home, invest- ment properties, shares, cash and debt - which may have changed significantly after your divorce. Doing so will ensure your hard-earned assets are protected and your wishes are carried out when you die.
Don't forget to look after yourself! Divorce can be incredibly tough, so make sure you take time to do something fun, nurture yourself, or plan a holiday to look forward to.
Any advice given is general only and has not taken into account your objectives, financial situation or needs. Because of this, before acting on any advice, you should consult a financial planner to consider how appropriate the advice is to your objectives, needs and financial situation.