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Divorce reduces retirement income

Divorce reduces retirement income

Category: Retirement

Updated: 19/06/2013
First Published: 19/06/2013

MONEYFACTS ARCHIVE
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Divorcees due to retire this year are bracing themselves for a lower income compared to those who have remained married, according to the results of a study released today.

Going through a divorce was found to reduce retirement income by up to £2,600 (16%) a year, with a typical divorced retiree anticipating an annual income of around £13,800. In contrast, couples who have never suffered a marriage breakdown are expected to receive around £16,400 a year once retired from full-time work.

At least 40% of people planning to retire this year are divorced, of which 18% claim to have no private pension savings at all compared with 14% of existing couples.

Divorced individuals were also found to be more likely to owe money as they enter retirement. Almost a quarter (22%) of retiring divorcees have existing loan, mortgage and credit card debts compared to 18% of those who have remained married.

Just 33% of divorcees believe they have adequate savings to fund their approaching retirement.

Clare Moffat, pension specialist at Prudential, which carried out the research, said: "Divorce can be emotionally draining but also financially draining as the retirement income gap for divorcees demonstrates.

"Whether it is due to the financial implications of splitting existing pensions, the cost of setting up a new home or legal fees, divorce clearly has a major impact on the retirement plans of many people," she added.


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