Even if you haven't been through a divorce yourself you will probably know someone who has. According to this latest research the financial effects of divorce last much longer than the initial cost of the break up. New research from the Prudential found that the ‘Class of 2015’ divorcees had an average expected retirement income of £15,700 compared with £17,800 for those who have never been through a marriage break-up.
The insurer’s ‘Class of’ Study tracks the future plans and aspirations of people planning to retire in the next 12 months and it is now in its eighth year.
Prudential’s research highlighted that the impact of divorce on retirement incomes is something that will impact a significant number of this year’s retirees – more than one in three (35%) have experienced a divorce. One in five (20%) ‘Class of 2015’ divorcees will retire with outstanding debts, averaging £22,100. Those who have never divorced will carry a slightly smaller debt burden into retirement (average debts of £21,700).
Prudential’s results also show that people approaching retirement who have been divorced (13%) are more likely to delay the date of their retirement compared to those who have never been divorced (11%). One in five (19%) of retirees who have been divorced expect to live in retirement with an income below the Joseph Rowntree Foundation minimum income standard for a single pensioner of £9,500 – compared with 14% for those who have never divorced.
Clare Moffat, a pension’s specialist at Prudential, said:
“Although the emotional impact of divorce may have long passed, it could come as a shock for people to find that it continues to impact them financially into their retirement. A pension fund is likely to be one of the largest and most complicated assets a couple will have to split in the event of a divorce.
“The support of a professional financial adviser or retirement specialist should help ensure that any financial decisions taken have the least possible impact on incomes available later in life. Professional advice is particularly important in the face of the recent changes to pension’s legislation and divorced retirees acting on advice received under the previous rules may want to consider seeking updated advice on any post-retirement plans they have made.
“During a divorce, the costs can quickly mount up, with legal fees, the cost of setting up a new home and the effect of splitting any existing retirement savings all potentially impacting the ability of those involved to continue saving into a pension. Unfortunately, divorce is most likely among those aged 40-44, the period in many people’s lives when earning potential peaks and the most valuable pension contributions can be made.”
Sources: www.pru.co.uk (Article published: 2015/04/16)