In 2022, the divorce rate in the UK fell to its lowest level since 1971. However, while the incidence of divorce may be falling, one demographic is bucking this trend – the rise of so-called “silver splitters”.

According to the Office for National Statistics (ONS), England and Wales saw a 28% fall in the number of divorces between 2005 and 2015. However, in the same period, the number of men aged 65 and over divorcing went up by 23% and the number of women of the same age divorcing increased by 38%.

The same is true elsewhere, with the American Psychological Association reporting that, in 1990, 8.7% of all divorces in the United States occurred among adults 50 and older. By 2019, that percentage had grown to 36%.

Divorcing at a later age can be complex, with clients often having decades of shared wealth to untangle. It can also be tricky from a financial perspective, with older clients likely sitting on larger and more valuable property, investment, and pension assets.

Despite this, research from Legal & General has revealed that just 12% of divorcees over the age of 50 consulted a financial adviser.

By not fully addressing and dividing this wealth equitably, divorce can have a huge impact on your clients’ financial wellbeing, particularly in retirement. Read on to find out more.

2 in 5 over-50s say that their settlement was financially unfair

Ending a marriage that may have lasted for decades can be a wrenching or a liberating experience. Many clients may want to move onto an exciting new phase, while others may be blindsided by the end of a relationship that may have been a part of their entire adult life.

While many clients will turn to a solicitor for advice, most won’t consider speaking to a financial planner. As the below research from Legal & General shows, this could mean important assets are overlooked, leaving a client with regrets.

Source: Legal & General

Working with a financial planner from early in the divorce process can give clients reassurance about their financial future and ensure that all assets are considered as part of the settlement.

Pensions are often overlooked but can be a vital source of security for older clients

The Legal & General research reveals that 21% of people who divorced over 50 see their retirement lifestyle negatively impacted because of their divorce, while 33% consciously downsized to control costs.

Of course, when this life-changing event happens at an older age, there is less opportunity to mitigate the impact. So, getting the right advice is crucial – particularly when it comes to pension assets.

One issue is that women are significantly more likely to waive their rights to their ex-partner’s pension (30% compared to 17% of men).

Debora Price, Professor of Social Gerontology at the University of Manchester, says: “Many people see a pension as being outside of other ‘shared’ assets, and see it as belonging entirely to the spouse who’s contributed to it.

“This impacts the share that women feel they should or can gain in a settlement, particularly as men have substantially more private pension wealth than women.

“For instance, the median pension wealth for men aged 65 to 69 was just over £212,000 compared to just £35,000 for women in the same age bracket.”

Whatever your client’s position, it’s important not to overlook pension assets as these are a powerful way of providing a sustainable and reliable retirement income. A financial planner can add value here.

For example, we can:

• Help to value pension assets to enable an equitable split
• Set up pensions to receive any court-ordered pension share
• Use tools such as cashflow modelling to help clients understand what their financial future looks like. This can empower them to negotiate from a position of “what they need” when it comes to agreeing a settlement.

Older clients may have built up substantial pension assets in various schemes. Expert advice can help both parties to determine how to divide these funds.

Clients may need reassurance when it comes to their property arrangements

On divorce, one of the most pressing questions a client will have is: “Where am I going to live?”

Decisions about the family home – and other property the clients may own – can also benefit from advice at the outset. Seeking advice may give your client options they may not have previously considered.

For example, a client may assume that they have to sell their family home in order to divide the proceeds. However, a later-life mortgage might allow them to buy the other party out, so they don’t need to sell the property.

Your over-50s clients may have paid off their mortgage or built up substantial equity, so their property assets can be a major source of financial security. Exploring all their options can give them the confidence to enter into negotiations on a sure footing.

Get in touch

Debora Price at the University of Manchester highlights the benefits for clients of speaking to a Pensions on Divorce Expert (PODE).

She says: “They focus on the impact of divorce on pension assets and can help ensure that assets are divided fairly. They aim to help both parties feel satisfied that they’ve received an equitable settlement.”

We’ve been helping divorcing clients for more than 20 years and specialise in working with legal professionals.

As well as being respected PODEs, we’re also a Chartered firm and offer advice from Resolution specialists – members who have proven their skills and expertise through rigorous assessment of their knowledge and ability to work harmoniously with clients who are facing family disputes.

To find out how we can help, email info@blueskyifas.co.uk or call us on 0118 987 6655.