For richer, for poorer

Whether it comes as a devastating blow or a welcome – if daunting – opportunity to start afresh, divorce is a significant life event. The Holmes and Rahe Stress Scale, first formulated in the 1960s, places it second only to the death of a life partner in terms of its impact on physical and mental wellbeing.

Of course, the financial effects of divorce can be equally cataclysmic, further adding to the stress of the experience. And for older couples, whose financial lives have been intertwined for longer and whose future planning is likely to have been predicated on their marriage lasting into retirement and beyond, the impact is particularly severe.

Worse for women

According to the Office for National Statistics,¹ the age of divorcing couples in the UK is the highest it has ever been – an average of 47.7 years for men and 45.3 years for women, with one in four divorces involving a person aged over 50. Research by Legal & General² found that more than a third of these individuals would see their income reduced following divorce, by an average of £10,650.

For women, the impact is particularly severe. Legal & General Retail Retirement³ found that they are likely to see their household incomes fall by a third in the year following their divorce – almost double the rate experienced by men (33% vs. 18%). Quite understandably, women are significantly more likely to worry about the impact of divorce on their retirement (16% women vs 10%).

A roof over your head

And they have good reason to be concerned. The pensions playing field is far from level: by 65, men are likely to have accrued twice the median pension wealth of women, and in the event of a divorce, women are more likely than men to forfeit their entitlement to a share of their former husband’s pension pot. As research by Age UK⁴ reveals, 40% of women aged 55-70 years are dependent on their partners’ income for a decent retirement, as taking time out from the workplace to care for children or elderly relatives has hampered their ability to accrue pension assets of their own. 

It is important not to focus solely on the marital home at the expense of other assets. Nevertheless, divorce does have an impact on security of housing tenure. Although a resident parent of young children is likely to remain in the marital home following divorce, once children have flown the nest the picture becomes rather different. And once again, women are disproportionately impacted: research by Springer Nature⁵ found that whilst at least one partner of either sex is likely to move home in the four months following separation, instability for women is ongoing – their rate of relocation remains high even three years after separation, and decreases at a slower pace over time to that of men.