How you can financially get through and recover from divorce
Palman says you can minimise legal fees by agreeing as much as possible up front - and only venting to close friends. 'Keep it efficient with your lawyer.'
She says the first step is to understand your joint assets and liabilities.
'I sometimes see a person coming to see me for an initial consultation and I'll say to them, 'what are you expecting to leave with?' and they have no idea the value of the house, the value of the mortgage ... the other party's KiwiSaver balance'.
Knowing those numbers at the date of separation is important, as it can help protect you from losing out if one party goes on a spending spree.
'Then you've got some sort of proof that you know that person incurred those transactions after that date, and that wasn't in relation to anything to do with you, so you've got a bit of a chance maybe of that being evened up in the washup'.
When children are involved, Palman says there are tools to help calculate what child support payments might be involved, including a calculator on the IRD website.
Where one party earns significantly less than the other, it's worth exploring spousal maintenance.
'It's designed to help them get back on their feet over a short period of time. For myself personally, it was a period of two years.'
It's also important to update your will and insurance, she says, which can be done very quickly via your lawyer and insurance broker.
Despite the emotional and financial upheaval, Palman says there's opportunity on the other side of divorce.
'Even though it's a terrible thing that you've been through - hey, what a beautiful opportunity to design your life moving forward.'
Listen to the full episode of The Prosperity Project for more advice on the financial cost of divorce.
The podcast is hosted by Nadine Higgins, an experienced broadcaster and a financial adviser at Enable Me.
You can follow the podcast at iHeartRadio, Apple Podcasts, Spotify, or wherever you get your podcasts. New episodes are released every Monday.
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NZ Herald
2 hours ago
- NZ Herald
KiwiSaver hardship reveals hidden cost of this economic downturn
We had news last week that KiwiSaver members withdrew more than $470 million for hardship reasons in the past 12 months amid continuing economic stress. Inland Revenue figures showed $470.7m was taken out of KiwiSaver in the June financial year, up 56.6% from $300.5m over the prior period. Looking back through the figures, there has certainly been a big spike in withdrawals in the past two years, but they have been on the rise for several years. Since Covid, both the number of people withdrawing funds and the amount withdrawn have risen steadily. As a barometer of the general economic situation, that isn't great. But the bigger problem with these hardship withdrawals is that the ultimate cost is (quite literally) compounded through the years. More than $1.3 billion of KiwiSaver funds has been withdrawn for hardship reasons in the past five years. If we do some back-of-the-envelope calculations and assume this money could have earned around 7% returns for the next 20 years, then we get a figure of more than $5b that will be missing from the nation's pool of retirement funds by 2045. Given the current trend of withdrawals, I suspect this is a conservative estimate. I understand why we allow withdrawals for hardship. It doesn't make sense for people to lose their homes or to go hungry when they have thousands of dollars sitting in a KiwiSaver account, so I'm not advocating that we stop allowing the withdrawals. However, there is a hidden cost and the situation highlights just how crucial it is for the Government to put more focus on retirement savings. There is a lot more money coming out of the KiwiSaver scheme to fund people into their first homes. Since Covid hit, an average of about $1.2b a year has been withdrawn from KiwiSaver for first home purchases. A home is an asset at least, and home ownership is an important step on the path to financial independence. I suspect we just have to accept the first home buyer withdrawals as a feature of the KiwiSaver scheme. If young people are in the scheme from the start of their working life and have $10,000 or $20,000 to put towards a house deposit, they are probably ahead of where many in my generation were at the same age. But the reality is that as a nation, we're well behind on where we need to be with our retirement savings. According to Stats NZ projections, the percentage of the population aged 65+ will increase from roughly 16-17% in the early 2020s to about 19-20% by 2030. By 2050, around 24-26% of New Zealanders are expected to be 65+. The old-age dependency ratio (ratio of elderly to working-age population) is expected to nearly double between 2020 and 2050. Our annual superannuation bill already comes in at more than $20b, and Treasury has projected that to rise to about $45b by 2037. According to Budget 2025 data, New Zealand Superannuation costs $4352 per person per year, making it the third-largest area of government spending after welfare ($6181 per person) and health ($5804 per person). From the Treasury's long-term fiscal projections, spending on NZ Super is projected to grow from 4.3% of GDP in 2010 to 7.9% in 2060, an increase of 3.6 percentage points. It is also rising as a percentage of the Government's total tax revenue – from about 17% now, it is projected to rise above 21% by 2037. So we know we have a problem. It seems almost certain that the age of superannuation will have to be raised to 67 in the coming years – despite the current opposition of NZ First and Labour. Future governments will almost certainly come under more pressure to means-test. KiwiSaver, which currently has total funds of $122b, is one of our great hopes. But the total figure is flattering. There are more than three million KiwiSaver members so the average fund size is just $37,000. Hopefully, that will be skewed by a lot of young people who will see their savings grow dramatically in the next decades. That brings us back to the downside of withdrawing funds early for hardship, though. We need to be saving more, not less. Moves by the Government to lift the default contribution rate for both employees and employers to 4% from April 2028 were a step in the right direction. However, they pale in comparison to Australia's compulsory scheme, which requires 12% employer contributions. The scheme has the equivalent of $4.5 trillion invested, making Australia the fifth-largest holder of pension fund assets in the world, not per capita but in nominal terms. Australia, for the record, also allows people to withdraw funds for hardship, but one suspects fewer people there need to. If we want to make the most of the KiwiSaver scheme we have, we need to look more closely at who is withdrawing their money and why. Meanwhile, young Kiwis are voting with their feet and joining the Australian Superannuation scheme ... by virtue of moving to work there. Liam Dann is business editor-at-large for the New Zealand Herald. He is a senior writer and columnist, and also presents and produces videos and podcasts. He joined the Herald in 2003.
The Spinoff
4 days ago
- The Spinoff
Rainbow charity Outline in limbo as ‘questionable financial practices' alleged
Insolvency is flagged as a risk in an Outline annual report that suggests the possibility that 'unsupervised recklessness' – including $100,000 of undocumented credit card transactions – has led to serious financial problems. The 'dire' state of Outline's books has been laid bare ahead of its annual general meeting tonight, with its board revealing insolvency is a risk. The rainbow mental health organisation's annual report, released to Outline members ahead of tonight's AGM, paints a picture of 'questionable financial practices' and 'limited transparency', with an IRD debt repayment plan not adhered to, a yet-to-be-completed financial audit finding undocumented transactions, including 'un-provenanced credit card transactions worth circa $100,000', and auditors questioning 'the volume and usage of international travel expenditures'. Outline provides phone and online support services for rainbow communities across Aotearoa, as well as in-person support groups in Auckland. A widely respected charitable organisation, according to its annual report it has conducted more than 3,000 online chats and phone calls in the latest financial year, as well as providing 'everything from emotional support to letters of advocacy, food parcels, and clothing' to trans clients in a time of heightened transphobia. While an increase in staff numbers and a reduction in funding opportunities put pressure on cash flow at the organisation, 'a lack of controls and policy' is a recurring theme in the report. The charity ended the 2024/25 financial year with a $186,000 deficit, after income of just over $589,000, and 'no significant financial reserves'. The 2025/26 draft budget forecasts a $129,000 loss, 'with our current cash reserves due to be depleted in September 2025'. As of Tuesday this week, Outline was 'unable to secure assurance from an auditor that we have sufficient reserves and income to be a going concern in 2025', according to the report. This means 'we are at risk of trading while insolvent, which places us in breach of the Charities Act and the Incorporated Societies Act. If we do not balance our budget through a combination of additional income and reduced expenditure, we will be operating illegally.' 'The picture narrated above and illustrated by the attached profit and loss and draft budget is dire,' concludes the financial report section of the annual report. 'It has been caused by unsupervised recklessness. Damage limitation was made difficult by the inexperience of the board and by a lack of timely decisions but was improved following the chief executive's decision to resign,' it continues. Emmaline Pickering-Martin stood down as CEO of Outline in May 2025, after 16 months in the role. On December 6, 2024, Outline had announced it was at risk of closing permanently and launched a fundraising campaign to help it stay afloat. 'The government's attacks on Rainbow communities are hitting hard, and Outline is no exception,' said an Outline post on social media. 'Our funding is drying up while the need for our services grows every day.' In a LinkedIn post on December 12, Pickering-Martin wrote that she was 'beyond disgusted and angry and hugely hurt' by a response from Te Whatu Ora/Health NZ, on behalf of mental health minister Matt Doocey, declining the organisation's plea for more financial support. Several months later, Pickering-Martin posted about requests for funding being turned down by non-government organisations: 'After having hui after hui to get us to tailor our application to explain how dire our situation is … and still … GOOD LUCK AFTER 50 YEARS ENJOY CLOSING THE DOORS… That's essentially what every single email says. Sorry we can't help you Brown Org. 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'Operating at reduced capacity and with limited up-to-date information, we were not always able to meet our governance expectations as required. Delays and limited transparency in financial reporting and coordination made it harder to respond in an effective and timely manner.' Outline began the financial year with nine staff and now has five, as well as a network of more than 60 volunteers who operate its phone and chat lines. Its wage bill for the 2024/25 year was $505,000, peaking at nearly $12,000 per week in December 2024 and reducing to $4,500 by June 2025. 'Our financial position is such that further staff reductions are pivotal for financial survival,' said the annual report. After the wage bill, the next biggest chunk of the organisation's $777,000 outgoings were koha at $57,000 and general expenses at $27,000, with $24,000 spent on national travel, $17,000 on hauora (health), $17,000 on rent, $16,500 on professional development and $15,500 on international travel, according to the annual report. 'The discretionary nature of most of the largest categories of spend in the financial year signals a lack of controls and policy in the organisation,' it said. Other concerns raised in the report included an outstanding debt to Inland Revenue of more than $65,000 and a repayment plan that was agreed but 'not maintained'. Separately, a third party had contracted the organisation to provide services and had begun making payments to Outline in the 2024/25 financial year. The money was spent before the work commenced, according to the report. The largest portion of Outline's $589,000 income was donations totalling just over $200,000, with non-government grants contributing over $176,000 and government grants over $77,000. Its annual report thanks 16 major funders, including The Tindall Foundation, Rātā Foundation, Le Va, Sweat with Pride and the One Percent Collective, as well as Te Whatu Ora, Hāpai Te Hauora and the Lottery Grants Board. After Pickering-Martin's departure, the board sought legal advice 'to clarify its responsibilities and ensure appropriate next steps', Kelly said in the report. The board then assumed interim leadership and established weekly board meetings, and 'worked with staff to start to reduce expenditure [and] develop new revenue pathways'. First quarter costs have reduced by 87%, 'due largely to the commitment and effort of our remaining staff', who are 'showing grace and patience as the board has struggled to retain control over costs'. It added: 'Staff have made significant sacrifices during the last financial year, while also being unwillingly exposed to questionable practices that require investigation to ensure we maintain regulatory credibility as an organisation.'
Otago Daily Times
4 days ago
- Otago Daily Times
KiwiSaver hardship withdrawals boom
By Susan Edmunds of RNZ and Nine to Noon More than 50,000 people made withdrawals from their KiwiSaver accounts on the basis of hardship in the year to June - compared to about 18,000 five years ago. KiwiSaver provider Simplicity chief economist Shamubeel Eaqub said the increase started in 2023 and the reasons were easy to understand - the recession and cost-of-living crisis were putting ongoing pressure on people's budgets. "But some context - the number of hardship withdrawals were 1.6 percent members, and 0.3 percent of savings. The hardship, as is true for the wider society, is concentrated pain among a few." Sorted's personal finance lead Tom Hartmann told RNZ's Nine to Noon programme today it was likely the ability to withdraw from KiwiSaver was giving people "peace of mind" that if their situation worsened they could draw on their savings. The average withdrawal was $8800, he said. For someone in their 30s earning $75,000 a year, a withdrawal of that size in a year could reduce their not-inflation-adjusted final balance by about $40,000. Hartmann said there had not been an increase in savings suspensions, which indicated that the withdrawal was a temporary stop gap for people who would get back to making contributions. People can opt to stop contributing to KiwiSaver for a year at a time, and can renew the suspension at the end of the 12 months. The number of people on a savings suspension had dropped from 89,000 a year ago to 85,000. Hartmann said the key thing for people considering a withdrawal was to make it a last resort. "Typically, there are other sources of support that need to be explored first." Financial helpline MoneyTalks was one option, he said. "The team there have reporting seeing an increase in even middle-income people exploring their options." Eaqub said for people making a withdrawal, it was often a choice between "certain hardship today versus more savings later in life". But he said the situation was worse for those without KiwiSaver. "Many low-income people do not contribute to KiwiSaver because the employee contribution lowers their take home pay. "But they also miss out on the employer contribution and government subsidies. It means when non-contributors face hardship, they do not have this fallback." But Rupert Carlyon, founder of Koura KiwiSaver, said people on lower incomes could build up good balances. "Someone earning $60,000 contributing 3 percent will end be putting in [about] $3500 per year, so over 10 years plus returns that really adds up. "You can easily see a $60,000 salary becoming a $45,000 balance over 10 years. That is the power of KiwiSaver, we are often encouraging people to save that would not otherwise do it."
