The Impact of Divorce on Finances When You’re Retired

published Aug 07, 2023
2 min read

While the emotional toll of divorce is well-known, its financial repercussions, particularly during retirement, are often underestimated. When couples part ways later in life, the complexities of dividing assets, divorce and pensions, and retirement savings can significantly alter the financial landscape for both individuals.

In this article, we will delve into the key challenges and considerations that arise when navigating divorce in retirement, shedding light on crucial strategies to secure a stable financial future.


Parting with the Pension Pot

Even in 2023, women tend to have less personal pension wealth than their male counterparts, therefore less personal financial security for their later years. Additionally, figures show that around 28% of women will waive their rights to their spouse’s pension as part of their divorce settlement. This can prove to have a big impact as some women will not only have less pension of their own but will be deprived of a share of their former spouse’s pension.



During a marriage, a couple will usually have spent a considerable amount of time and money on building a home and by retirement age, are likely to have paid off any mortgage on their property. In the event of a divorce, the property will usually – unless stated in a document or agreement otherwise – be sold and the proceeds shared.

In many cases, this will mean that both parties will need to secure alternative accommodation and, unfortunately, some people will struggle to find somewhere suitable to live with just one half of the proceeds of the marital home. This can be a particular problem in larger cities such as London where the price of property – both for rent and for sale – are astronomical.



As well as worrying about a roof over their head, divorcing couples are also faced with sole responsibility for bills. If one party is on a fixed income such as a state pension, this can be extremely daunting. While there is some government help for retirees and their utility bills, these costs can nonetheless add up.

Spousal Maintenance

With older generations, it is often the case that, during the marriage, a traditional family dynamic was in place whereby one partner went out to work and the other partner took care of the home and the children. In this instance, it is possible that the main earner will be required to pay spousal maintenance to the other partner either in the form of a lump sum or regular payments. In some cases, this can make a considerable difference to post-divorce finances.

A Taxing Subject

If the divorcing couple has shared assets like property or investments and they and they choose to sell or gift those assets, they may be subject to Capital Gains Tax which can take a considerable chunk out of the value. If one partner decides to give one or more of these assets to their spouse as part of a divorce settlement, this should be done before the divorce is finalised as, this way, you will not need to pay Capital Gains Tax.

Retirement Plans

Shockingly, around one in three UK pensioners have no savings for their retirement and have to therefore survive on their state pension alone. Others may have a larger savings pot and this has often been accrued to pay for a specific thing such as a holiday home or trip of a lifetime.

Following a divorce, any and all savings will usually be shared between the two parties meaning that they will be left with significantly less money. As well as a financial impact, this can very much also have an emotional impact whereby one or both former spouses will need to come to terms with the fact that their retirement plan may not happen.

Facing the Future Alone

The prospect of a divorce during your retirement years can be an extremely daunting one. When facing a divorce at any age, it’s really important to secure the services of a good family lawyer who will be able to advise you of your rights in order to make sure that you get everything that you are entitled to. During this process, it’s vital that both parties are honest and transparent about any and all assets as failing to do so can invalidate the process.

Divorcing in later life can also be emotionally challenging and can lead to fears of isolation and loneliness as well as anxiety and organisations such as Age Concern are on hand to offer help and support for people who are struggling with these things.

Please be advised that this article is for general informational purposes only, and should not be used as a substitute for advice from a trained legal professional. Be sure to consult a familt lawyer/solicitor if you’re seeking advice on divorce. We are not liable for risks or issues associated with using or acting upon the information on this site.