How a big life shock like divorce can derail retirement plans


With divorce impacting 6.2 couples for every 1000 marriages – the financial impact of divorce can have a big impact, especially on women.  

A 2020 study showed that women were disproportionally financially impacted by divorce with an average 29% decline in income and a 15% average increase in income for men.

Emma is 68-years-old and works as a carer for older people in their homes. Emma loves her work and plans to work for as long as she is able, supporting people with dementia and at the end of their lives.

Retirement is not something Emma is considering right now; the impact of divorce on her financial situation means she needs to keep saving until she can no longer work.

NZ Super will provide a safety net for Emma when this time comes. Without the financial security of a house or a nest egg, she will be reliant on NZ Super, and is focused on saving as much as possible before then. 

Emma says, “I work as a carer and love it. I am very fortunate to work in private homes, it is lovely to be able to make a difference in people’s lives and keep them at home.”

Emma is positive about working but acknowledges she will not be able to continue to work as she is now.

“As long as I have my health, I am happy working and hope to continue working until I am 75, perhaps not at the same rate as I am now.”

NZ Super provides a lifeline to many New Zealanders who have had significant events in their life which impact their financial situation. It can be difficult to recover financially from the unexpected as you get older.

“At this stage of my life, I am most grateful for what I receive from NZ Super and know that I will require it later in my life as well, as cannot see how life will get any less expensive,” says Emma.

Emma is one of many New Zealanders working past the age of 65. With over 20% of 65-year-olds continuing to work, it is becoming increasingly common. 

“Like many women, I had life challenges. I paid for everything and more in my marriage. When I left the marriage 10 years ago, I did not have significant savings and did not get enough out of the relationship to be able to buy my own home,” she says.

Emma’s financial situation was further impacted by rising house prices, locking her out of the market, and the security of owning her own home.

“I am a survivor and have worked hard and saved hard, however with the way house prices went, I cannot afford to buy my own home,” she says.

Until recently there has been a perception that many people retire at 65, following full time work, with the security of a mortgage free home.

This scenario has typically been based on the concept of one main earner in a relationship and with very limited savings outside NZ Super*. However, many people do not fit in this box, which makes NZ Super even more important for surviving after paid work stops. 

Women are especially vulnerable, given the challenges financially after the impact of life events such as divorce and when traditional limited income and career breaks have affected their earning potential.

Emma is philosophical, “I try not to worry about my future. I think there are people a lot worse off than myself, who through ill health or other circumstances life will be a challenge for them in old age as they cannot work.”

*KiwiSaver is 25 years old, which has impact on the ability to save for current retirees given this shorter period.