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The firm’s new research to mark Divorce Day (2 January) found that 272,000 people (13%) have delayed their divorce due to cost-of-living pressures.
It also found that money played a role in many people’s decision to delay separating, but particularly with divorces that have happened since 2020 – among recent divorces 19% delayed due to financial reasons.
Despite holding off due to the high cost, nearly half of people who divorce (48%) see their incomes shrink by an average of 31% in the year after their separation. This can leave someone with £9,700 less a year on average.
Divorces are ‘financially unfair’
In two out of five divorces (40%), people felt that it was not an equal divorce financially, with one party being favoured. Despite this, just 7% of people will consult a financial adviser as part of their divorce.
Only 31% of people who had divorced had signed Clean Break Orders, meaning that more than two-thirds (69%) could be liable to a future claim from their ex-spouse.
Legal & General Retail managing director Paula Llewellyn said: “Many couples have not even sorted the necessary paperwork to ensure they have a clean break from their financial obligation to one another.
“By consulting a financial adviser people increase the likelihood of a divorce being fair and equal. While the number of people seeking out this support has increased in recent years, we need to encourage more couples to take this step.”
Divorces impacting retirement
The financial challenges of divorce are particularly pronounced for people aged over 50 who end up saving £63 less each month towards their retirement due to these financial challenges, Legal & General noted. Nationwide, this means that 200,000 people are saving less for retirement.
The research found that while 58% of divorcing couples often consider the value of their family home, just 20% consider pensions when dividing assets with their partners and 29% actively waive their rights to the value of them.
Paula Llewellyn continued: “Understandably, working out how to split pension assets is not the priority for most separating couples. But it is important to make sure both parties are provided for in retirement, especially when one party has been the primary earner and built up a pension, while the other – usually because they have taken on more family caring responsibilities – has not.”
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