How divorce affects retirement

Divorce|April 15th 2015

People who have been through a divorce have significantly less money when they retire than those who have not, a new study suggests.

According to research from the financial services company Prudential, divorcees who plan on retiring this year are can expect an average income of £15,700 once they stop working, whereas the average income for people who have never been divorced is expected to be £17,800.

The study predicts that as many as one in five divorcees can expect to receive less than £9,500 once they retire. This is the minimum income standard for a single pensioner set by social research charity the Joseph Rowntree Foundation. By contrast, only 14 per cent of people who have not been divorced can expect similarly low income following their retirement.

Researchers said that many people will retire with debts this year and those who have divorced will have slightly more. The average debt is £22,100 for divorced retirees and £21,700 for never-divorced people.

Clare Moffat is a pensions specialist at Prudential. She said that while “the emotional impact of divorce may have long passed”, many people do not realise that it can continue to affect their financial life, even when it comes to retirement.

She suggested that one reason for its lasting impact could be because divorce is most common among people aged between 40 and 44, which is “when earning potential peaks and the most valuable pension contributions can be made”.

The financial situation for divorced people has not improved in the last two years. In 2013, Prudential published a similar study which found that married people fared better in retirement than their divorced peers.

Photo by AAG via Flickr

Author: Stowe Family Law

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