Women’s incomes are cut in half in the year following divorce, leaving them financially vulnerable, new research from L&G has found.
In comparison, men’s incomes fall by just 30% over the same period.
The findings highlight the financial vulnerability that many women face after a marital breakdown, as well as the longer-term impact on retirement.
One in four (24%) women struggle financially after their split, compared to just 16% of men, In addition, nearly double the number of women (19%) than men (10%) find it hard to meet the cost of essentials.
Sharing housing and utility costs with a partner can significantly reduce individual expenses and women are more likely to feel the impact of losing the financial support of a partner, with two thirds (63%) citing this as a challenge, compared to only 39% of men. L&G said women face additional hurdles balancing work and family responsibilities following a separation, with 14% of women having to reduce their working hours versus 7% of men.
The savings and retirement provider said its findings showed that over half (51%) of divorces involve women who were financially reliant on their husbands during their marriage, compared to 24% of cases where women were the main breadwinner and 22% of marriages where the couple earned the same amount.
The findings also explored the financial impact of divorce on retirement, with 13% of women significantly more concerned about the financial implications of retiring alone, compared to 8% of men. Divorce settlements frequently fail to account for the value of people’s pensions, disproportionately affecting women who typically retire with a much smaller pension pot. Only 13% of divorcing couples consider pensions when dividing assets and women are far more likely to waive their rights to their partner’s pension than men.
Lorna Shah, managing director, retail retirement, at L&G, said: “Women often face greater financial challenges after a divorce and the effects can last well into retirement. This is in part because women are still far more likely to pick up the majority of childcare and broader caring responsibilities, both during and after a marriage. After separating, they not only have to manage the higher costs of living on a single income but also deal with the impact this may have had on their retirement savings.
“When dividing finances, it’s important to look at everything, including pensions, which are often overlooked but can be a major asset and, if possible, to take proper financial advice. This is especially important for women, who may have taken career breaks, or worked part-time to support their partner’s career, leaving them with smaller pension savings of their own. Divorce is a tough time, but careful financial planning can make a big difference.”
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