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How you can financially get through and recover from divorce

How you can financially get through and recover from divorce

NZ Herald3 days ago
'Bite your tongue and show grace, because the more you argue and bicker, it can just take a lot longer - and you can't move on. The longer things linger, the more negative and expensive it gets.'
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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Photo: RNZ 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," Eaqub said. Sorted's personal finance lead Tom Hartmann told Nine to Noon, 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. Kiwisaver hardship withdrawals data from Simplicity. Photo: SIMPLICITY / SUPPLIED He said the average withdrawal was $8800. 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. Sorted's personal finance lead Tom Hartmann. Photo: Supplied 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". "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." Sign up for Ngā Pitopito Kōrero , a daily newsletter curated by our editors and delivered straight to your inbox every weekday.

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