- Divorced couples face financial challenges in retirement, including limited grocery budgets
- The importance of including pensions in divorce settlements for a secure retirement
- Changing divorce laws and the financial implications for couples
Even though divorce is difficult, more than half of divorced couples worry about paying for needed groceries in old life.
59% of divorced couples believe they will only be able to afford a weekly food expenditure of £54 in retirement, according to new research by insurer Scottish Widows, compared to just over a third of married couples who believe they will struggle.
Only bread, milk, eggs, meat, and items will be affordable with substantial inflation.
NimbleFins reports that we spend £44.70 every week on groceries and restaurants.
Scottish Widows also discovered that more than a third of respondents who were asked about their financial situation in the event of a divorce said they could not manage to run a car in retirement and would rely on public transport, family, and friends.
46% said they could only afford an annual retreat and had to forgo overseas vacations.
Scottish Widows believes that the bleak future confronting many divorcing couples demonstrates the importance of ensuring that retirement planning takes into account the assets of both parties, including pension plans.
Pete Glancy, head of pension policy at Scottish Widows, states, “Approximately 42% of marriages end in divorce; however, a third of divorcees did not discuss retirement savings and pensions as part of their settlement, despite the significant impact on retirement lifestyle.”
He adds, “Our research demonstrates that much more must be done to ensure that pensions are treated as a crucial aspect of divorce proceedings.” Women are more likely to leave full-time work to raise children, forfeiting pension contributions.
Due to the introduction of a “no-fault” law last year, the number of couples divorcing is also anticipated to rise. England and Wales couples can now divorce without assigning blame if their marriage has irretrievably broken down.
Before April 2022, the usual grounds for divorce were adultery, unreasonable behavior, or desertion. Or if the couple had spent two years living apart by mutual consent or five years if one partner did not want the other to quit the marriage.
In Scotland and Northern Ireland, the grounds for divorce have not altered; an “irretrievable breakdown of the marriage” must still be attributed to adultery and unreasonable behavior, for example.
In Scotland, a divorce petition can be filed one year after living apart with assent or two years without consent. Northern Ireland has a two-year consent period and a five-year no-consent period.
Law Society of England and Wales spokesman: ‘By replacing divorce grounds that previously ascribed fault, you are removing a factor that can create a potentially hostile environment – increasing the likelihood of drawn-out, costly legal proceedings.
It allows couples to concentrate more on how to fairly divide their assets.
To petition for divorce, a court fee of $593 is required, and attorneys’ fees are typically around $14,500. With legal fees frequently beginning at £200 per hour, the cost per couple quickly escalates when redistributing joint assets.
Even though the residence is typically the largest asset, pensions are frequently undervalued. There are three primary methods for dividing pension funds. First, they can be divided before retirement, albeit with a court order that may cost up to £2,000 in fees.
Second, a ‘pension attachment order’ can give a portion of a retiree’s future pension to the other companion.
Finally, “pension offsetting,” when one partner keeps the pension fund but must offset it against the home’s value.
To determine the true value of a pension, consult a financial adviser, who typically charges £150 per hour. You can locate an independent financial adviser by visiting the unbiased.co.uk website of the trade association.
