AMP : NATSEM 39 – For Richer, For Poorer

AMP.NATSEM Income and Wealth Report

For richer,

for poorer.

Issue 39 - December 2016

This report explores the financial impact of divorce in Australia…

We look at patterns of divorce in Australia, across individuals and families, and the financial impact of divorce on home ownership, employment status and household income and assets, including superannuation and debt. We also look

at the effect of divorce on spending on children and education outcomes.

Contents

Foreword 2

Introduction 3

Divorce in Australia 4

The financial wellbeing of divorcees with

no dependent children 6

Employment and income 6

Home ownership 7

Household assets and debt 8

Assets 8

Debt 9

Retirement prospects 10

The financial wellbeing of divorced families with children 11

Household income 11

Employment and income 12

Home ownership 14

Household assets and debt 15

Assets 15

Debt 17

Retirement prospects 18

Spending on children 19

Household spending 19

Child care 21

Financial stress 22

Education outcomes 23

Conclusion 24

References 26

Technical Notes 27

Foreword

One in three Australian marriages are likely to end in divorce. An unsettling reality and not a statistic many of us would contemplate on our wedding day.

The emotional shock and effects of separation can be overwhelming, particularly when children are involved.

Quite rightly, looking after the emotional wellbeing of all involved should be the priority. However, dealing with this often means the financial effects of separation are delayed, mishandled or even overlooked.

And, as the findings in this report - the 39th AMP.NATSEM report - show, the financial effects can be considerable, over both the short and long term.

For example, it takes five years to recover from the financial impact of divorce and there remains a 20 per cent gap in the financial wellbeing of divorced and married couples even six years later.

The research also indicates that divorce is happening later in life, during our prime wealth accumulation and child rearing years, amplifying the financial repercussions.

This report does not attempt to address the complexities of divorce or its sometimes devastating psychological consequences. Rather, it analyses marriage and divorce trends, and looks at the financial impacts of divorce on men, women and children.

The report's objective is to raise awareness of the economic impact of divorce and to enable Australians to make more informed decisions in planning for the future.

The findings reinforce the value of having a plan in place to achieve your goals. A clear strategy and a solid financial foundation will go a long way towards accomplishing what matters to you, regardless of life's twists and turns.

I hope you find this report informative and helpful.

Paul Sainsbury

Chief Customer Officer AMP

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