According to the insurer Prudential, people planning to retire this year who have previously been divorced will be taking an average hit of £2,100 per year in their expected retirement income.
The insurer’s ‘Class of….’ study, which tracks the future plans and aspirations of people planning to retire in the next 12 months is now in its eighth year. This year, the research found that for the ‘Class of 2015’ divorcees, the average expected retirement income is £15,700 compared with £17,800 for those who have not been through a marriage breakdown. One in five ‘Class of 2015’ divorcees will retire with outstanding debts, averaging £22,100. Those who have never divorced will carry a slightly smaller debt burden into retirement with these averaging at £21,700.
Prudential’s results also show that people approaching retirement who have been divorced (13%) are more likely to delay the date of their retirement compared with those who have never been divorced (11%).
19% of divorced retirees expect to live in retirement with an income below the minimum income standard for a single pensioner of £9,500 –compared with 14% for those who have never divorced.
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. A pension fund is likely to be one of the largest and most complicated assets a couple will have to split in the event of a divorce.
The support of a professional financial adviser or retirement specialist should help ensure that any financial decisions taken have the least possible impact on incomes available later in life. Professional advice is particularly important in the face of the recent changes to pensions legislation and divorced retirees acting on advice received under the previous rules may want to consider seeking updated advice on any post-retirement plans they have made.”
I would also add that expert legal advice during the divorce process – when the distribution of the parties’ pension funds is being considered – is also crucial.