Posted by Patrick Hart, Partner
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Divorcees £2,000 a year worse off when it comes to retirement
Divorcees planning to retire expect to get £2,100 less a year in retirement income compared to those who have never suffered a marriage breakdown.
Annual expected pensions for those looking to leave work this year is £15,700 among those who have divorced, while those who have never gone through a marriage break-up anticipate receiving £17,800 a year, a survey by Prudential found.
Former spouses set to retire this year will also do so with more debt than those who are married, or those who never married.
One in five divorcees will retire with outstanding debts of £22,100 on average, compared with £21,700 for non-divorcees.
The impact is significant as some 35 per cent of people retiring in 2015 are divorced, and have therefore had to split their retirement savings with a former partner, and shoulder legal fees and the cost of setting up a new home.
To compound the pain, those whose relationships have failed are also more likely to live on an annual pension below £9,500, the level seen as the minimum to survive on.
Clare Moffat, pensions 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.
“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.”
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