Prudential’s Class of 2013 research, the latest of its annual studies into the financial plans and expectations of people planning to retire in the next year, has for the first time looked at the impact of divorce on retirement finances.
The results have highlighted stark differences in expected retirement income between those who have been divorced and those who have not.
The research shows that 40 per cent of those planning to retire in 2013 have been divorced, and in general they are less likely to have private pensions, more likely to retire with debts and less likely to believe they are financially well prepared for retirement.
They are also less likely to expect to be able to leave an inheritance. Divorce reduces average expected retirement income by around £2,600 p.a., and for those who have been divorced and are planning to retire in 2013, this will be an average reduction in income of 16% a year.
Nearly one in five (18%) of previously divorced 2013 retirees have no private pension savings, compared with 14% of those who have never been divorced. Prudential also found that 22% of those who have been divorced are retiring with debts, compared with 16% who have not been divorced, while just 45 per cent expect to leave an inheritance, compared with 52 per cent who have not been divorced.
Only one in three (33%) of those who have been divorced believe they have saved enough for a comfortable retirement, while just 42% of those who have divorced say they are financially well-prepared for retirement. In addition, 46% still have mortgages compared with 40% of those who have not been divorced.