- 07 Nov 2022
- 2 min read
Can I afford to leave a spouse in retirement?
In October 2022 The Law Society Gazette recorded that the number of divorce applications reached a decade high following the introduction of the new ‘no fault divorce’ law in April of the same year. The theory behind the increase is that people have been waiting for the change in law, so that they can divorce amicably without blame.
Whilst the introduction of ‘no fault divorce’ may have created an influx of divorce applications, it is possible that that the state of the economy and the impact of the global pandemic has pushed additional strain onto society as a whole, including marriages.
With the cost of living crisis, we could see divorce rates decrease, as people start to doubt whether they can afford to carve two households out of the same income. It is certainly a worrying time for many people, but it can be particularly concerning for those in their retirement. At this stage in their lives, they may have limited or no ability to generate their own income and their mortgage raising capacity, to bridge the gap between available capital and their housing need, can be potentially non-existent. It can seem impossible to meet their monthly outgoings without relying on the financial support from a financially stronger spouse.
What are my financial options for divorcing in retirement?
Many people are unaware that it is possible to be financially independent but still share in pension income, through a pension sharing order. This type of order allows a person to have a pension sum credited into their own pension, so as to top up and increase their pension income. In a longer marriage, and when the parties are closer to retirement than not, it is more usual to calculate a share of pension income on retirement, so that both parties have the same level of income.
There are also flexible ways to look at housing needs, depending on what is important to the parties. Even options such as equity release can be explored as a way to enable parties to live separately if they need to release capital.
If you are looking for advice in relation to how your finances may look following a separation, Trethowans offer a free initial 30-minute consultation for family law matters. Contact the family team on 0800 2800 421 or get in touch here.