Sue and John had been married nearly 40 years when John died in a car crash. At 64, Sue was suddenly single and unprepared. As if the emotional impact was not enough, John had managed their financial affairs and with his death, Sue was thrust into a world she knew little about. Moreover, she was shocked to discover the true extent of their household debt!

Sue knew their home was mortgaged, but had no idea the car was under finance. Nor had she known about John’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. Not only did Sarah have to take on the majority of care for Ben, but also with a fraction of the normal income to her disposal.

An RMIT study found that 59% of women believed their financial circumstances were negatively impacted by divorce or separation.

Sue’s strategy

Under guidance from her adviser, Sue 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 Sue 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 strategy

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 15.3% lower than men’s. Women also 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 Sue don’t have the same growth and income opportunities and must work with what they already have.

As a woman, it is very easy for us to sit back and let our partners take care of “all things financial”. But, in reality, should anything ever happen to our partners, it will save us a lot of financial heartache to at least have a general idea of what our position is in terms of financials. Ensure you know where assets and liabilities are, what the value of those are, and who to contact should you ever be in the position that you need to.

And, if you’re at a complete loss like a lot of women are when the unforeseeable happens, regardless of what stage of life you are in, sound financial advice and strategic planning can help set you on the path to financial independence and reduce the negative impacts of becoming “suddenly single”.

Important information and disclaimer

MK Wealth Solutions is a Corporate Authorised Representative No 100223 of Synchron ABN 33 007 207 650 AFSL 243313. The information provided in this article has been provided as general advice only. We have not considered your financial circumstances, needs or objectives and you should seek the assistance of your personal financial adviser before you make any decision regarding any products mentioned in this article. Whilst care has been taken in the preparation of this material, no warranty is given in respect of the information provided and accordingly neither MK Wealth Solutions and Synchron, nor its related entities, employees or agents shall be liable on any ground whatsoever with respect to decisions or actions taken as a result of you acting upon such information. Any general tax information provided in this publication is intended as a guide only and is based on our general understanding of taxation laws. It is not intended to be a substitute for specialised taxation advice or an assessment of your liabilities, obligations or claim entitlements that arise, or could arise, under taxation law, and we recommend you consult with a registered tax agent.