Average Loss Is £30k By Retirement Age – But Many Don’t Take Financial Advice

There is a growing number of people divorcing in retirement, with the number of over-60s legally separating doubling since 1993, and the number of divorces in marriages of over 30 years remaining the highest by far in 2022 according to data from the ONS.

This could be for a number of reasons. Longer Life Expectancy - people are living longer, healthier lives, which can lead them to reassess their current relationships. Reduced stigma - the stigma surrounding divorce has lessened over the years. Greater financial independence - older adults, particularly women, have become more financially independent, giving them the means to live alone and support themselves. Changing attitudes and empty nest syndrome - once children have grown and left home, couples may find they have little in common, leading to a re-evaluation of their marriage.

Expert Opinion

“The impact of divorce can be particularly hard on those who separate in later life – from an emotional perspective, the loss of a partner is akin to bereavement.

“From a financial perspective, divorcing later in life can be particularly hard hitting as there is less time to refill the pot. Loss of pension can be particularly devastating. However, with careful legal and financial advice there are options. A later life couple who has no intention to remarry, may for example want to consider Judicial Separation.

“Judicial Separation is formal separation that’s recognised by the courts; historically it has been used where a couple is religious and one of them does not want to divorce for religious reasons.

“However, it can also be used where there is a financial benefit in remaining married. Crucially, a judicially separated spouse is likely to remain entitled to a widows or widower’s pension on death of the other and it may be a “better” option than an immediate divorce.

“Judicial separation does also have its downsides, it doesn’t give the absolute certainty of divorce – it’s also a less common process. However, couples should not dismiss it altogether. Each situation is individual and dependent on the circumstances involved, joined up advice is the key.”
Sarah Balfour, Family Law Partner

Expert Opinion

“Individuals and couples should take advice both from a legal and financial perspective on what effect the current arrangement together with the death of one party would have on their finances. For example, if unmarried you may not be able to claim under your partner’s pension if something happens to them. Crucially if you divorce you may also lose this benefit.

“Another popular inheritance tax measure for those in later life who are cohabiting is to marry, to ensure that the survivor benefits from the spouse exemption (assets are able to pass inheritance tax free to a spouse on death), however this can create unforeseen consequences as a divorcing spouse will have financial claims that an unmarried partner would not. If a couple goes on to divorce anyway, the benefit may be lost.

“It may be suggested that this is not an issue anyway – why would you want to leave your ex-spouse anything on your death anyway? But it may be useful to be able to do so (perhaps on a life interest trust that can be terminated) tax free from a planning perspective to be able to get more assets inheritance tax free to your children.”
Emma McCann, Lifestyle and Estate Planning Partner