1 February 2007
Baby boomers set to feel the cost of divorce in old age
New research published by the Australian Institute of Family Studies in its Research Paper - The consequences of divorce for financial living standards in later life - reveals that having been divorced has negative financial consequences for older age.
As the first generation that experienced high rates of divorce reaches retirement age, the number of older Australians who have experienced divorce at some point in their life will increase dramatically in coming decades.
Using data from the Household, Income and Labour Dynamics in Australia (HILDA) Survey, the report provides some of the first estimates of the financial consequences of divorce for Australians aged 55 to 74 years:
- Home ownership rates of both the divorced and remarried and divorced singles were lower than those who had married and never divorced.
- Divorced single men and women had lower median levels per capita household assets than the married never-divorced ($178,300 and $199.900 respectively).
- People who have divorced and remarried regain some, but not all of the financial advantage of those who stayed married.
- Married never-divorced older women were substantially less likely to have had superannuation (37.8 per cent) than divorced and single women (49.3 per cent) and divorced and remarried women (46.4 per cent).
- Older divorced single men were less likely than either divorced remarried men or married never-divorced men to have superannuation (43.6 per cent, 57.5 per cent and 57.9 per cent respectively). The divorced singles also had much lower levels of superannuation assets than the other groups.
- For both men and women, the divorced and single received higher levels of income support payments (including the age pension) than either the divorced and remarried and the married never-divorced. This has important implications for the financing of retirement incomes in Australia in coming decades and the extent to which the taxpayer will have to bear the costs of providing for retirement incomes.
- The lower level of financial living standards experienced by those who have been divorced could be reduced by encouraging greater levels of labour force participation among divorced women prior to retirement age, assisting the divorced to obtain education or retraining, and delaying retirement.
The consequences of divorce for financial living standards in later life, by David de Vaus, Matthew Gray, Lixia Qu and David Stanton. (AIFS Research Paper no.38 2007)
Contact:
Dr Matthew Gray
Deputy Director, Research
03 9214 7816
0400 525 325