Even an uncontested divorce can cost about $1500–$5000 in legal fees. Photo / 123rf
Divorce is often described as one of life’s most stressful events. It can be financially devastating as well as emotionally draining.
On paper, the upfront costs are sobering: even an uncontested divorce may cost around $1500–$5000 in legal fees, according to Family Law Insights, while more complex separations that involve property or custody battles can quickly escalate into the tens of thousands.
Beyond the lawyers and court fees, the real financial shock is found in the day-to-day aftermath. Suddenly, two households must be supported on the same combined income that used to support one. Rent or mortgages double, utility bills multiply and insurance costs are duplicated.
The financial aftershocks don’t end there. Divorce disrupts long-term savings strategies, particularly KiwiSaver. Splitting balances is common because KiwiSaver is treated as relationship property under the Property (Relationships) Act 1976. What was once one pool of retirement savings is suddenly halved. For many Kiwis, this can create a feeling that retirement dreams are slipping out of reach.
The statistics highlight stark realities. International research shows that women are disproportionately impacted financially by separation.
A 2020 study by Te Ara Ahunga Ora – Retirement Commission revealed that women face an average 29% drop in income post-divorce, while men often experience a 15% increase.
The reasons are complex: women are more likely to have taken time out of the workforce, to have prioritised unpaid caregiving and to earn less over their careers. This means that at the point of separation, their KiwiSaver balances and personal investments are often already behind.
For men, the disruption is still serious. Higher average earnings may cushion the blow, but losing a significant portion of retirement savings, or having to establish a new household, still creates long-term challenges.
This is where financial advice can make a tangible difference. Divorce is a deeply emotional process and emotions often spill over into money decisions. It’s easy to become either overly conservative – hoarding cash in a low-return account out of fear – or overly risky in the hope of “making back” what has been lost. Both approaches can be damaging.
Key questions include:
KiwiSaver remains the backbone of retirement planning but post-divorce, many Kiwis also need more flexible investment tools.
Divorce changes life’s trajectory, but it doesn’t have to destroy financial security. With the right plan, the right advice, and the right investment tools, it’s possible not only to recover – but to rebuild stronger.
Generate is a New Zealand-owned investment KiwiSaver and Managed Fund provider managing over $8 billion on behalf of more than 175,000 New Zealanders.
This article is intended for general information only and should not be considered financial advice. The views expressed are those of the author. All investments carry risk, and past performance is not indicative of future results.
To see Generate’s Financial Advice Provider Disclosure Statement or Product Disclosure Statement, go to www.generatewealth.co.nz/advertising-disclosures/. The issuer is Generate Investment Management Limited. Past performance is not indicative of future performance.
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