Figures released today by the Office of National Statistics show that despite a gradual decline in the number of people getting divorced each year, divorce rates for those aged 60 and above have increased significantly.
Prudential analysis of this data shows that between 1991 and 2011, the number of divorces amongst men aged 60 plus increased by 73% and the corresponding figure for women is 82%. This is despite an overall decline in divorce rates of 26% for the same period.
Prudential's own research shows that divorce reduces expected retirement income significantly, raising concerns for the financial wellbeing of this growing demographic.
According to Prudential's Class of 2013 study, the average expected income for those retiring this year is already at a six-year low, however divorce reduces this by a further 16 per cent. As a result, people retiring this year who have been through a divorce expect an average annual income of £13,800, compared with £16,400 for those who have not been through a marriage breakdown.
Those who have been divorced are also more likely to enter retirement with outstanding debts and less likely to have private pension savings.
Clare Moffat, pensions specialist at Prudential, commented: "Divorce can be emotionally draining but also financially draining as the retirement income gap for divorcees demonstrates. Whether it is due to the financial implications of splitting existing pensions, the cost of setting up a new home or legal fees, divorce clearly has a major impact on the retirement plans of many people.
"Women's retirement incomes are particularly vulnerable to the financial effects of divorce. Many of them may be relying on their husband's pension and in some couples the wife may have had little input to the financial decisions that have been made over the years.
"For those divorcing or dissolving a civil partnership, a pension fund is likely to be one of the largest and most complex joint assets to be split. Advice from specialists including a retirement expert or a financial adviser can help ensure that decisions made at the time of a divorce are to the benefit of both parties' eventual retirement incomes. Free advice is also available from organisations such as The Pensions Advisory Service."
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