The financial divide women face after separation
Women’s incomes are often reduced by half following a divorce, leaving them financially vulnerable. New research indicates that 24% of women struggle to make ends meet, compared to just 16% of men. Nearly one in five (19%) find it challenging to cover essential expenses, a figure nearly double that of men in similar situations. This financial strain can extend into retirement, where women encounter even greater challenges due to smaller pension pots and missed career opportunities.
The introduction of no-fault divorces in the UK three years ago has made it easier for couples to separate. However, this legislative shift has also highlighted the stark financial difficulties that many women encounter post-divorce. Living alone is inherently more expensive, as there is no partner to share housing and utility costs. For women, this adjustment is particularly challenging, with 63% citing the loss of financial support as a difficulty compared to only 39% of men. These statistics present a concerning picture of unequal financial recovery following a marital split.
Career and employment challenges
For many women, divorce signifies a substantial change in their career trajectory. While 19% re-enter the workforce post-divorce and 24% view it as an opportunity to refocus on their careers, the journey is fraught with challenges. Balancing work and family responsibilities becomes a formidable obstacle, with women twice as likely as men to reduce their working hours to accommodate childcare needs (14% vs. 7%). Furthermore, 19% of women report difficulties in managing parental and work duties after separating, compared to just 9% of men.
This interruption not only affects immediate income but also has long-term ramifications on career advancement and retirement savings. Women who take career breaks or accept reduced working hours frequently contribute less to pension schemes, thereby exacerbating the financial gap in their later years.
Overlooked role of pensions
The financial disparity extends into one of the most overlooked aspects of divorce settlements: pensions. Only 13% of divorcing couples include pensions in their negotiations, despite these being a substantial financial asset. Alarmingly, 28% of women choose to waive their rights to their partner’s pension, compared to 17% of men.
This oversight leaves women disproportionately disadvantaged, as they tend to retire with smaller pension pots. Women often earn less during their working years due to the gender pay gap and sacrifices made for caregiving responsibilities. The Pension Freedoms initiative, introduced a decade ago, provides flexibility for those aged 55 and older; however, such measures offer little solace to women who have received minimal or no pension assets following divorce.
Planning for a secure financial future
The financial impact of divorce does not cease with the immediate fallout; it extends well into retirement. Women are significantly more concerned about retiring alone, with 13% expressing worries compared to 8% of men. This ongoing financial strain highlights the importance of comprehensive divorce settlements that take into account all assets, including pensions.
Careful financial planning during and after divorce is essential. Women who have taken career breaks or worked part-time may benefit from seeking professional financial advice to better understand their rights and options. Addressing pensions during settlement negotiations can significantly contribute to securing long-term financial stability.
Source data:
[1] Opinium Research conducted 2,945 online interviews of UK adults who are divorced. The research was conducted between the 25th October and 12th November 2024.
This article does not constitute tax, legal or financial advice and should not be relied upon as such. Tax treatment depends on the individual circumstances of each client and may be subject to change in the future. For guidance, seek professional advice. The value of your investments can go down as well as up, and you may get back less than you invested. past performance is not a guide to future performance.
