The study looked at the finances of people planning to retire at some point in 2018, as well as their plans and aspirations. The average expected annual income for people who have divorced is £17,600. Interestingly, for those who are still married or who have never married is much higher at £21,400.
Divorcees more likely to retire in debt
The Prudential research also found that 23% of people who were in debt when they retired were divorcees, compared to just 16% of people who hadn’t experienced marital breakdown. Even more worryingly, 15% of divorcees had no pension savings at all when they reached retirement age. This figure was 11% for those who hadn’t been divorced.
Other key findings included:
- The number of people over 55 years old getting divorced is rising, particularly in 2015-16
- 14% of divorcees falling below the minimum standard of annual income in retirement– the Joseph Rowntree Foundation’s benchmark of £9,998 a year or £192.27 a week
- In more positive news, divorcees retired with lower debts (£30,500) compared to non-divorcees (£36,900).
This research highlights the dangers of neglecting financial planning, both throughout life and particularly during a major life and legal event such as a divorce. Divorcing couples, who have the unenviable task of dividing and untangling perhaps a lifetime of shared assets, are not always taking enough care to protect themselves and their futures financially.
What can you do to avoid divorce debt and lower retirement income?
While it may be difficult when going through a divorce, it’s crucial to get the right advice on your finances and retirement planning. Prudential’s pensions specialist Clare Moffat offers this guidance:
“The stress of getting through a divorce can mean people understandably focus on the immediate priorities like living arrangements and childcare but a pension fund and income in retirement should also be a priority. A pension fund is one of the most complex assets a couple will have to split so anyone going through a divorce should seek legal and financial advice to help them do so. For many more couples, the increase in value of pensions mean that it is often the largest asset. It goes without saying that advice is crucial as early as possible in any separation where couples have joint assets.”
If you don’t know where to start when it comes to sorting out shared finances such as pensions, this is where the assistance of a professional can be invaluable. It’s important to make the right choices at this crucial time.
Contact the team at Wirral family law specialist Tracey Miller Family Law for essential help navigating financial issues during a divorce, and for the very best advice so you can make informed decisions for your future.