Whether it's down to the stresses of a pandemic or simply due to higher expectations in later life it's hard to say.
But the fact remains that if clients do contact you about the likelihood of divorce, the kindest piece of advice will be to let them know that they're not alone:
- January alone sees more divorce applications than at any other time of year with the first Monday after Christmas known as 'Divorce Monday'. 1
- For 42% of married people, the story ends in divorce. In fact, views on the Citizens Advice divorce webpage increased by 25% in the first weekend in September, compared with the year before. 2
- Divorcing couples aged over-60 rose by nearly 75% from 2014 to 2018. 3
The financial cost
We spoke to Rebecca Aldridge of Balance Wealth who says "Couples should think about what their life post-divorce will look like. What do they need to survive? Will they need to go back to work? Will they be able to stop work completely?
Here are the bald facts4:
- One in six (16%) buy a new home following separation, with an average cost of £144,600 per person
- Moving out of the marital home can cost more than £35,000 for those renting (51%).
- Legal fees are the most common cost when a relationship ends, encountered by over half (54%) of couples, followed by setting up a new home (40%) and annual child maintenance payments (21%)
- Couples spend an average of £14,561 on legal costs
It's a rocky road as sorting out finances generally takes an average of 14.5 months after a split; well over a year.4 You and your clients will need to have tough conversations early on, covering a range of issues including debt, pensions, wills and finding a new place to live.
Rebecca Aldridge adds, "How (will) childcare arrangements change, both financially and practically? How will assets be shared between them in a way that is fair now and later in life?"
Men do better than women
A recent report found a massive 40.3% gap in pension savings between women and men5 - a difference of £7,500 a year. And for those aged 65 years and over, men's median pension wealth for pensions in payment is double that of women (£223,933 for men vs. £112,967). 6
And yet when couples go through divorce, just 12% consider pensions when they divide up their assets, while 24% actively waive their rights to the value of them.7 As such women's pension pots end up being a third of divorced men's: (£9,000 compared with £30,000) even though on average, women tend to live longer.5
Cohabiting couples
Of course, not all silver splitters are married. The 50 something year olds of today are the punks of yesteryear. You may need to warn clients that they don't automatically have the right to make claims against each other.
Each party has to establish an interest in the former family home, unless of course it was purchased together.
Our best advice is to forge close working relationships with local solicitors so your services can be accessed by existing ones - and new ones via referrals.
Rebecca Aldridge says, "if people are separating now it's no different to non-lockdown times. They should work with the best family lawyer they can afford, who they feel they can get on with and trust.
Gently does it
Overall, you may need to step in and provide a financial education for one party, as it's common that one partner often manages the couple's finances. This can leave the other struggling.
Clearly, it's a subject that requires a great deal of empathy and understanding.
Sources
2 https://www.bbc.co.uk/news/uk-england-54117821
3 https://www.aviva.co.uk/retirement/retired-life/retirement-and-divorce/
5 https://www.aviva.co.uk/aviva-edit/your-money-articles/women-know-gender-pension-gap/
7 https://www.ftadviser.com/retirement-income/2020/12/16/how-divorce-can-affect-retirement/?page=2
This post was funded by Aviva
