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Divorce costs £3,800 a year in retirement income, says Prudential

Expected annual income for divorcees retiring in 2018 is £17,600

Divorcees who plan to retire in 2018 can expect their yearly income to drop by £3,800 compared to those who've never divorced, according to new research from Prudential which highlights the impact of marriage breakdown on pension saving.

The Prudential annual study has run for the last 11 years and tracks the finances, future plans and aspirations of people planning to retire in the year ahead. For the those retiring in 2018, expected annual retirement income is £17,600 for those who have previously been divorced compared with £21,400 for those who have never experienced a marriage break up.

Prudential analysed the latest available divorce statistics from the Office of National Statistics. The figures, covering up to 2016 showed that, the number of people getting divorced has started to rise again and that those over the age of 55 saw the greatest increase in 2016 compared to 2015.

Richard Collins, Family Law Partner at Charles Russell Speechlys, said:

"We are beginning to see many more people divorcing just prior to or during retirement. These decisions can only be made easily if there is proper financial provision in place for both spouses' retirement. Often a pension has been built after a long marriage and is a valuable asset. With easier access to pensions and more flexibility on how pensions can be treated, couples now seem to be less wary about divorcing in their retirement years knowing that they have financial security and the free time to pursue the lives they wish to lead after divorce.

"This research highlights the importance of divorced couples continuing to pay into their pensions even after a pension share on divorce has been implemented. Usually, a pension built up during the marriage is shared equally on divorce. If the divorcing couple are some way off retirement, this often gives the person receiving the pension share the chance to plan.

"The fact that divorcees tend to have lower debts than their married counterparts may be down to the courts encouraging a clean break between divorcing couples where a clean break is affordable. This allows divorcing couples to regain control over their own finances and consider how they want to plan for their separate futures. Many divorced couples re-evaluate their spending and finances after divorce and take this opportunity to build a stable financial future for themselves including growing enough pension provision for their retirement. I've seen people post-divorce relishing their independent financial status and seizing the opportunity to make financial decisions for themselves, knowing that they are building up wealth and securing their future."

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23/2/18