If you’ve not heard the term “silver splitters”, this refers to people aged over 50 who divorce in later life. But did you know that the number of couples divorcing in this age group is on the rise? With Divorce Day, the first working Monday of January, fast approaching year on year, solicitors report1 receiving the highest number of divorce applications early January, as relationships break down after the festivities. So, we thought we would explore the implications from a financial standpoint.
Our Managing Director, Rebecca Aldridge, was recently invited by Aviva to give her thoughts on this subject. In the article2, Rebecca highlighted the need for couples to think about how their lives will look after the divorce and what they will need to do to survive. Taking an average of 14.5 months to sort out finances post-divorce, from an emotional perspective, divorcing in later life can also take its toll on your mental health, especially if you were looking forward to certain retirement plans and winding down with your partner.
Divorce rates are rising
According to Aviva, divorce rates rose by 75% for couples aged over 60 between 2014 and 20182. And the Office of National Statistics3 reported a further increase in 2020, which could be partially due to the impact of the pandemic. So, this means the number of couples divorcing is higher than at any time since 1972 when The Divorce Reform Act 1969 came into force.
Depending on your personal situation, getting a divorce in your 50s and 60s could have some big financial implications. If you’ve not yet retired and one person is the sole breadwinner, or their earnings are substantially higher than yours, there could be some tough conversations ahead. You will need to talk through any outstanding debt, shared property, pensions and wills, as well as arrangements for your children, if you have any.
The true cost of divorce in later life
If you’re going through the divorce process or going through a period of separation, here are some points4 to consider:
- Where will you live, and can you afford to buy your own place? The average cost per person to buy their own home after a divorce is £144,600. And if you plan on renting, the cost of moving out of the marital home averages £35,000 or more.
- Do you have adult children still living at home and can you afford a place large enough, so they can continue living with you?
- If you have teenagers or younger children, then child maintenance payments may need to be discussed and agree on financial and practical arrangements.
- Will you need to keep working, or will the settlement enable you to stop work? Bear in mind that legal fees tend to average £14,561, and whoever applies for the divorce will need to pay the divorce fee, currently £593 at the time of writing5.
From April 2022, the long-awaited “no fault’ divorce act becomes law, so parties will no longer have to prove irretrievable breakdown or place fault or blame as part of the application. Because fault will be removed, applications can’t be contested, and joint applications will be allowed. Hopefully, this reduces animosity and stress in an already difficult situation.
Another thing to consider when it comes to divorce is pensions. Only 12% of couples factor in their pensions when they’re dividing up their assets. And yet this could lead to serious consequences later down the line, especially for women. We’ve talked before about the gender pension gap and that women typically could see a £78,000 shortfall in retirement savings compared to men6. And, as women tend to live longer, this pension gap could leave wives and civil partners short of much-needed income.
Not everyone who’s cohabiting is married or are in a civil partnership. And as “common law husband and wife” status is a myth in legal terms, long-term relationship breakups can have a high financial cost. Partners won’t automatically have any rights to claims for shared assets unless cohabiting agreements are in place. We always suggest working with the best family lawyer you can afford and someone you have a good rapport with and trust.
Know your financial position
Gaining a full understanding of your own financial position will help you get a fair outcome from your divorce settlement. If you and your partner are planning on an amicable split, then it’s worth sitting down together with your financial planner to understand all the implications of your breakup. If this isn’t possible, then at the very least, seek professional advice for yourself so you know where you stand financially.
Divorce is one of the most stressful events anyone can experience, especially in later life. So, anything you can do to reduce your stress levels is advisable, from both a financial and emotional viewpoint. By making sure you have a good picture of your future life and finances, you will stay one step ahead when you’re negotiating the terms of your divorce.
If you’re going through a divorce and would like advice from one of our independent financial planners, please don’t hesitate to get in touch.