The true financial impact of Divorce

Judi Bonham, Managing Partner and Head of Family Legal Services at WSP Solicitors

The impact of divorce: Research for Prudential among 10,605 non-retired UK adults, including 1,000 intending to retire in 2017 has shown that for those retiring in 2017 expected annual retirement income is £16,300 for those who have previously divorced compared with £19,400 for those who have never suffered a marriage break-up.

Also, around one in three people who have been divorced expect to retire with debts (32%), compared with just one in five (21%) of those who have not been divorced.

Those who have been divorced are also more likely to have retirement incomes below the annual minimum income standard for single pensioners set by the Joseph Rowntree Foundation (JRF). Around one in five who have been divorced (21%) expect to have incomes lower than the JRF’s benchmark of £186.76 a week, or £9,712 a year, compared with 13% of those who have never been divorced.

Couples have to think very carefully about how they will meet their ongoing living costs including the costs of bringing up their children as well as what their incomes will be on retirement. However a pension fund is likely to be one of the most complicated assets a couple will have to split in the event of a divorce; and can often be the next biggest asset after the family home.

There have been recent changes in pension legislation which has brought in more flexibility and so retirees who divorced a while ago may want to consider seeking updated professional financial advice on any post-retirement plans they have made.

Given this increased flexibility spouses without the pension or with a smaller pension are now more likely to look at pensions rather than other assets as an attractive option when seeking a financial settlement. There is also a trend of increasing divorce rates for over 55 years who are planning retirement or perhaps are already retired. Women in particular tend to have lower retirement incomes than men. This all contributes to making a pension contribution an important aspect to the financial settlement on divorce, especially as retirement can for many last a number of decades.

It is therefore essential that independent legal advice is sought at the earliest opportunity and consideration given to the true financial impact that a divorce will have when considering future financial arrangements.

 

Contact a Family Law Solicitor today to discuss your personal situation and the impact of divorce on your family.

Or read more articles on Family Law.

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