Leonie O'Connell, a financial adviser at Momentum Financial Planning, offers valuable insights to help individuals stay on track with their financial goals amidst the chaos of divorce.
According to data reported annually by Statistics South Africa through its Marriages and Divorces report, the number of male and female divorcees over 50 has steadily increased over the last decade.
It is revealed that the global trend of "grey divorce", characterised by devastating financial implications, is a growing concern, particularly for women, suggesting that financial advice can help individuals stay on track with their financial goals.
While divorce later in life brings unique challenges for both genders, she says that it tends to have a more significant impact on women.
Gender inequalities play a major role in why this occurs; women statistically earn less than men for the same amount and level of work, lowering their overall lifetime earnings. This has a knock-on effect on retirement savings among women, making them even more vulnerable in the wake of a late-life separation.
It is also explained that facing “grey divorce” navigate a range of complex and often overwhelming financial considerations, such as dividing retirement funds, understanding their entitlements under South African law, and re-evaluating their retirement goals.
O’Connell states that preparing for divorce before marriage is beneficial, especially for married couples. Seeking professional financial advice early can mitigate the financial consequences of a separation.
“Divorce can lead to a substantial reduction in household income, increased living expenses, and legal fees, all of which can significantly impact your savings and financial health,” says O’Connell.
“The division of assets, including retirement funds and property, can further complicate financial stability.”
Marriages in communities of property, for instance, stipulate a split down the middle when it comes to dividing up belongings, properties, and assets. However, the same applies to liabilities, which means that one spouse’s debt also becomes a shared burden by law.
Alternatively, under an ante-nuptial agreement without accrual, each spouse retains their individual assets, but the division of these assets can still be contentious and become heated. Understanding these legal frameworks is essential for a woman to protect their financial future.
She emphasises the value of being informed about your rights, including those related to pension funds and taking proactive measures like examining retirement plans, comprehending investments, and maintaining a clear awareness of your financial situation.
According to O’Connell, “Money is complicated, especially when it comes to the intertwining finances of a married couple. Seeking the advice of a credible and trustworthy financial adviser can help you navigate the complexities of divorce settlements, asset division, and long-term financial strategies. And do it in a way that works for your life and relationship.”
The Star
anita.nkonki@inl.co.za