Managing the ‘suddenly’ of ‘suddenly single’
Shirley and Peter* had been married nearly 37 years when Peter died in a car crash. At 62, Shirley was suddenly single and unprepared.
Peter had managed their financial affairs, but with his death, Shirley was thrust into a world she knew little about. Moreover, she was shocked to discover the true extent of their household debt!
Shirley knew their home was mortgaged, but had no idea the car was under finance. Nor had she known about Peter’s credit cards – one of which had funded their recent cruise-ship holiday.
Monash University reports that 34% of women over 60 are living in poverty.
Sarah was 30 when Jack* ended their marriage. Suddenly single, she found herself supporting seven-year-old Ben on one income in a household accustomed to two.
Worse, Sarah’s budding career as a veterinarian was curtailed as she was forced to reduce her work hours to suit Ben’s school routine.
An RMIT study found that 59% of women believed their financial circumstances were negatively impacted by divorce or separation.
Under guidance from her adviser, Shirley borrowed against the equity in her home to pay off the car and card debts. While doing this, she re-negotiated her loan, securing a better interest rate. She was left with one payment each month instead of several.
This meant she could more easily manage her fortnightly income and ensure she had money put aside for her utility, car and living expenses.
Her adviser recommended that Shirley make a one-off post-tax contribution to superannuation. As a low-income earner, she qualified for the government’s Co-contribution Scheme which paid up to $500 into her super fund.
It was a relief for her to know that she could manage her day-to-day affairs while still contributing to her retirement.
Sarah’s priority was income. At a friend’s suggestion, she rented her spare room by advertising on a flatmate website. Unsurprisingly, many respondents were women in the same situation. After interviewing likely candidates, Sarah invited Belinda and six-year-old Toby to move in.
The two women shared child-minding and school pick-up rosters, and the additional income helped make up for the loss of her former husband’s wage. She was soon able to resume full-time work and continue building her career.
Sarah’s income was her most valuable asset so she arranged income protection and life insurance through a financial adviser.
Furthermore, she destroyed her credit card in favour of a debit card. She was back on track to setting up her own veterinary practice in a couple of years.
According to the Workplace Gender Equality Agency (WEGA) women’s wages are approximately 14.6% lower than men’s.
Women traditionally take breaks from work to raise children or care for elderly parents.
All this adds up to a reduction in income, financial security, and retirement savings. Sarah found that by rethinking her lifestyle and spending habits she could support herself and her son.
Older women like Shirley don’t have the same growth and income opportunities and must work with what they already have.
Regardless of what stage of life you are in, sound financial advice and strategic planning can set you on the path to financial independence and reducing the negative impacts of becoming “suddenly single”.
* Names changed