Info & Advice

Are money issues delaying divorces and impacting post-separation income?

This blog post was provided by David Lamb of Lamb Financial. David is a specialist in lifestyle financial planning and one of the Experts listed on Splitting Up.

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In recent years, financial concerns have played a significant role in delaying divorces, with couples citing income worries, cost-of-living pressures, and the overall expense of legal proceedings. However, even when divorces do occur, the financial aftermath can be substantial, with average annual incomes falling by £9,700 in the year following separation.

According to recent research by Legal & General Retail, 13% of individuals, amounting to 272,000 people, have postponed their divorce due to the burden of cost-of-living pressures. These findings highlight the significant role of financial considerations in the decision to delay separation. Notably, since 2020, financial reasons have been a factor in 19% of recent divorces that were delayed.

Divorce can have a substantial impact on individuals’ financial wellbeing. In fact, nearly half (48%) of divorcing individuals experience a reduction in income, resulting in an average decrease of 31% in the year following their separation – equivalent to a loss of £9,700 per year. These statistics shed light on the dire financial consequences divorcing individuals face, highlighting the importance of addressing financial concerns as part of the divorce process.

Surprisingly, only one in five couples discuss pension wealth when dividing their assets during divorce. To address this issue, the Pensions and Lifetime Savings Association (PLSA) has updated its guidance on pension sharing following divorce. Given that one in three divorces occur after the age of 50, it is particularly concerning that individuals save £63 less per month towards retirement as a result of divorce.

A notable finding from recent studies is that two out of five divorces (40%) are perceived as financially unfair, with one party benefiting more than the other. Despite these concerns, only 7% of individuals consult a financial adviser during the divorce process, potentially neglecting the long-term financial implications. Additionally, it is worrisome that only 31% of divorced individuals have signed Clean Break Orders, leaving 69% vulnerable to potential future claims from their ex-spouses.

Financial considerations have become a significant factor in both delaying divorces and impacting individuals’ post-separation financial well-being. It is crucial for couples to proactively address financial concerns during the divorce process, including discussions about pension sharing. Seeking professional advice, such as consulting a financial adviser, can help ensure fair and secure financial settlements, protecting individuals’ long-term financial stability.

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