Divorce a quick way to see assets disappear

Do you know what the GST club is? It's nothing to do with tax and everything to do with divorce.  

A financial friend once told me he'd been halved by his first wife, had a quarter left after the second wife and was down to 12.5 per cent of his wealth after the third. You need to be old enough to recall the 1989 rate of GST to get the joke.

How about RAIDs? That stands for Recently Acquired Income Deficiency syndrome. It's a pre-divorce tactic to lower your partner's expectation in a divorce settlement. Sneaky. 

That along with other tell-tale signs such as having no explanation for missing money, making cash withdrawals and reducing contributions to retirement plans are all possible signs your spouse wants a divorce. 

Dollars cause divorce 

The Americans in particular seem to survey anything that moves and spread forth the scary stats. One study of 4500 couples found arguing about money was the only predictor of divorce for men.

Women had a few more gripes. One pundit quoted in The New York Timesclaimed the odds of finances causing a marriage to fail were 45 per cent.  

In February 2015 American bank SunTrust found 35 per cent of people with relationship stress blamed money. If you are in the age group of 45-55 years, almost half said money was the primary cause.

Late for a very important date

Figures from Statistics New Zealand show 42,660 couples got divorced in the last five years.

In people-numbers, that's over 85,000 of us sliced in half financially. Spook-alert; 13 years is the mean duration of a marriage ending in divorce.

Back in the first half of the 1950s fewer than 8000 couples split.

New Zealand's spike occurred in 1981, the year Charles and Diana tied the knot, with 12,395 divorces (3500 more than the 2014 year). Let's blame the Springbok tour or the underarm bowling for that one. Tensions were high. 

The financial trouble for most Kiwis is not the volume of divorces (apart from the infamous GST-club), but the demographics.

We are divorcing later. The median age in 2014 was 46 for men and 44 for women.

Back in the 1980s it was 37 and 35 respectively. In short, the later we leave it the harder it is to bounce back financially.  

The demographics have moved almost a decade. That's a lifetime in the investment world.

It's possible to double your money in that frame. In our mid to late-40s we should be paying off the tail end of a mortgage and pressing the accelerator on savings.

We need a 15-year run of turbo-saving to avoid financial stress at 65. Divorce in your 40s isn't financially fatal, but it's certainly a crash that puts you in critical condition.  

If it's doomed, "sooner rather than later" would be the clinical advice.  

Even better advice is to "make it work". Even high-income earners will find it difficult to recover the wealth and lifestyle they had. 

Don't rely on marriage number two, either. The American statistics tell us those have a 60 per cent failure rate and marriage number three a 70 per cent failure rate. It's a slippery slope into that GST club.

Don't blame it on the money

One of the smartest things I've read recently is "nobody gets divorced over money". The statement makes you baulk and mutter "yeah right".

A relationship guru called Kevin dared to say it and he explained money arguments are only a symptom of an underlying disease.

That disease tends to fall into one of four categories; poor communication, selfishness, addiction or poor coping skills.  

There is nothing wrong with money being the motivation to cure the real issues. Divorce, after all, is hellishly wealth depleting.

The lesson is that we may have mistakenly used money as a barrier to the truth about divorce.

Janine Starks is a financial commentator with expertise in banking, personal finance and funds management. Opinions in this column represent her personal views. They are general in nature and are not a recommendation, opinion or guidance to any individuals in relation to acquiring or disposing of a financial product. Readers should not rely on these opinions and should always seek specific independent financial advice appropriate to their own individual circumstances.