Zarah ChoudharyWomen’s income typically drops by 50% in the year after divorce – compared to a 30% fall for men – according to new research from Legal & General (L&G).
Published to mark three years since the introduction of no-fault divorce in the UK, the findings pointed to the disproportionate economic hit women take following separation, with longer-term consequences for their financial wellbeing and retirement.
Nearly one in four women (24%) reported struggling financially after divorce, compared to just 16% of men.
Almost twice as many women (19%) as men (10%) found it difficult to meet essential living costs, with 63% citing the loss of shared housing and utility costs as a key challenge – compared to 39% of men.
The report also highlighted how divorce often forces women to rethink their careers, with one in five returning to work post-divorce and 24% using the opportunity to refocus on their professional life.
Yet many face barriers in doing so as women are twice as likely as men to cut their hours due to caring responsibilities and are more likely to struggle balancing work with childcare with 19% of them struggling in comparison to 9% men.
Over half of divorces involve women who were financially dependent on their partners, while only a quarter were the main breadwinners.
Despite this, pensions – one of the most significant assets in a household – are often left out of divorce settlements.
Just 13% of couples take pensions into account when dividing assets, and 28% of women are more likely to waive their claim in comparison to 7% men.
This contributed to a wider gender pension gap, already exacerbated by lower earnings and time out of the workforce.
Women are significantly more likely to worry about retiring alone at 13% and men at 8%, in a post-Pension Freedoms landscape that offers greater flexibility – but also greater individual responsibility – for retirement planning.
Lorna Shah, managing director of retail retirement at L&G, said: “Women often face greater financial challenges after a divorce and the effects can last well into retirement.
“This is in part because women are still far more likely to pick up the majority of childcare and broader caring responsibilities, both during and after a marriage.
“After separating, they not only have to manage the higher costs of living on a single income but also deal with the impact this may have had on their retirement savings.”
Shah added: “When dividing finances, it’s important to look at everything, including pensions, which are often overlooked but can be a major asset and, if possible, to take proper financial advice.
“This is especially important for women, who may have taken career breaks, or worked part-time to support their partner’s career, leaving them with smaller pension savings of their own.
“Divorce is a tough time, but careful financial planning can make a big difference.
“That’s why we’ve created a financial health check tool to help guide you through this process.”
