Later life divorce is becoming more and more common, with one in four divorces in the UK occurring after the age of 50. Once the children have left home and we approach our ‘golden years’, it is perhaps inevitable that some couples will rethink their marriage and realise that it has run its course. The impact of COVID-19 has only fuelled this trend with divorce enquiries increasingly significantly since the first lockdown.
Regardless of whether it’s your choice or your spouse’s to divorce and whether or not your separation is amicable, this is likely to be an exceptionally challenging time. There is so much to think about when going our separate ways and while it’s easy to get overwhelmed by the emotional impact, it’s essential to safeguard your financial wellbeing and protect your future.
This is especially pertinent for later life divorcees as the question of financial security in retirement looms more closely. Divorce during these years may be more of a struggle because it comes at a time when you’re expecting to wind down and enjoy a smooth path to retirement. That being said, there is little time to waste when dealing with the emotional rollercoaster of divorce because time is of the essence when it comes to creating the best chance of good financial outcomes.
The good news is that the link between financial security and emotional wellness should not be underestimated – getting in control of the practicalities during the earlier stages of divorce may mean letting go of certain dreams you had as a couple but this will help you to heal and establish yourself more securely in the long run.
Make contact with a financial adviser early on during the process to ensure that you can reset your financial goals. This will mean reconsidering your financial objectives as an individual – working out what is fair and realistic once the assets, savings, investments and finances are divided. There will be the legal costs of the divorce itself to think about as well as questions about how to divide key assets such as the family home and long-term savings, and deal with any outstanding debt. This all needs to be taken into account when establishing your new financial normal.
Grey Divorce and the Gender Divide
With so-called ‘grey divorces’ a growing trend, the divorce gender divide remains as research shows that women, especially older women, will often be financially impacted more seriously than men in the event of a divorce. But this doesn’t mean that women should compromise themselves financially.
Pensions is one key area that financial advisers will address to ensure that women get a fair deal. Why? Because women are more likely to have smaller pension savings – an average of £70,000 less at retirement than men – due to the gender salary divide as well as more time spent out of the workplace due to home and childcare duties, and responsibilities for other family members.
Many grey divorcees are part of a generation where women commonly gave up their careers to be homemakers after which the burden of caring responsibilities made a (full) return to the workplace difficult or even impossible. Other women of this generation may not have had a career at all and, after relying financially on their spouses for years, the transition to single life – and single financial life – will come as even more of a shock.
Research shows that women are more likely to waive their rights to their partner’s pension than men (28% of women compared to 19% of men) in the event of divorce as the emotional cost of battling over the finances is just too high. This is particularly concerning as women are twice as likely than men to see their household incomes fall by a third in the year following their divorce. We need to consider the fact that women have a longer life expectancy and therefore more years in which savings will be utilised. Grey divorcees also face the issue that time is not on their side when it comes to making up any shortfall in income following a divorce.
As advisers, our team at TR Wealth offer a sensitive yet practical approach when helping our clients to navigate the impact of divorce on their financial planning. Our holistic approach means that you will be able to stay on track with your financial goals whilst minimising the stress and anxiety associated with later life divorce for a smoother pathway to a strong financial future.