Key Takeaways
- Divorce can cause a sharp fall in income. Research by L&G found women’s household income roughly halved in the year after divorce, compared with a fall of around 30% for men.
- Pensions are often the biggest asset after the home, yet they’re frequently left out of settlements, which can store up poverty for retirement.
- A financial settlement looks at each person’s needs, not just a straight split, and can include spousal maintenance, a pension share or a larger share of capital.
- Practical support such as Child Benefit, Universal Credit and a single person council tax discount can help while you adjust.
Maybe you’ve already done the sums at the kitchen table late at night. One income, two households, the same mortgage or rent, and children who still need feeding and clothing. It’s a frightening calculation, and it’s one of the main reasons people stay in marriages that have ended.
You’re far from alone in feeling it. The latest Office for National Statistics divorce figures, published this month, show the average marriage ending in divorce now lasts longer than ever before, and family lawyers have linked that partly to couples delaying separation because of the cost of living.
Falling into hardship after divorce isn’t inevitable, though. A lot of the long-term damage comes from decisions made in a rush during the divorce itself, and many of those can be avoided. This guide explains how. If you’d like to talk through your own situation, Osbourne Pinner offers a free 30-minute consultation with our divorce and family law solicitors.
Why does divorce hit some people so hard financially?
The simplest reason is that two households cost far more to run than one. Rent or a mortgage, council tax, energy bills and broadband all double, but the money coming in doesn’t.
The impact is uneven too. Survey research by L&G found women’s household income fell by around half in the year after divorce, compared with around 30% for men. Nearly one in five women said they struggled to pay for essentials. The partner who stepped back from work to raise children or support the other’s career often comes out with lower earnings and a much smaller pension, whether it’s a woman or a man.
That second problem can take decades to show. According to Which?, separate research found divorced women typically have £53,160 less in pension savings than divorced men, and women outnumber men by around two to one among divorced retirees living in poverty.
Why shouldn’t you rush into a quick deal?
When you’re exhausted and want it over, a fast agreement can feel like relief. But it’s also where many people lock in hardship for years. The classic example is agreeing to keep the house in exchange for giving up any claim to your partner’s pension. It feels secure today, but it can leave you with a home you can’t afford to run and very little to live on in retirement.
Before agreeing anything, make sure you understand what you’d be giving up and what you’d be left with, both now and in twenty years’ time. If the house is part of the problem, our guide on what to do if you can’t afford to buy out your partner explains the alternatives to a straight buyout or sale.
Do you know what’s actually there?
You can’t get a fair settlement if you don’t know the full picture. In many couples, one person handles the money and the other has only a rough idea of the savings, investments, pensions or debts.
Both of you have a legal duty to give full and frank disclosure of your finances. If a case goes through the court process, that disclosure happens on a detailed financial statement called Form E, backed by documents.
Start gathering what you can now, such as:
- Bank statements
- Payslips
- Mortgage details
- Pension statements
- Any loan or credit card balances
If you think your partner is hiding or moving money, raise it with a solicitor quickly.
Why are pensions so important?
Pensions are the asset most likely to be overlooked and one of the most likely to decide whether you’re comfortable or struggling later in life. They can be dealt with in a few ways:
- A pension sharing order moves part of one person’s pension into a pension in the other person’s name
- Alternatively, the pension can be offset, with one person keeping more of their pension and the other taking a bigger share of other assets, such as the house
Pensions are harder to value than they look. The figure on a statement doesn’t always reflect what the pension will actually provide, particularly with final salary schemes, so a specialist report is sometimes needed.
Crucially, a pension can only be shared through a court order, so an informal promise to share one isn’t enough.
Could spousal maintenance help?
If there’s a big gap between what you each earn, spousal maintenance may be part of the answer. These are regular payments from one former partner to the other, based on need and the ability to pay. They’re often set for a fixed period to give the lower earner time to retrain, return to work or increase their hours.
The courts prefer a clean break where one is fair, but not at the cost of leaving one person unable to meet their basic needs. Our free Spousal Maintenance Calculator can give you a rough idea of what might be appropriate. If you have children, our Child Maintenance Calculator can help you check what support for them should look like.
Should you keep the family home?
For many people, the home matters more than anything else, especially where children are involved. The courts give priority to making sure children have somewhere suitable to live, so keeping the home can be realistic. The question is whether you can afford it on your own.
A house can leave you asset rich and cash poor. Before fighting to keep it, check whether you could get a mortgage in your sole name, cover the repairs and meet the running costs. Sometimes a smaller home plus a better pension share or some savings gives far more security.
Our guide for the primary carer in a divorce looks at the home, maintenance and benefits in more detail.
What support can you claim?
So many people don’t claim help they’re entitled to after separating. Sometimes it’s out of pride and sometimes it’s because they don’t know it exists. Things worth checking include:
- Child Benefit, which can only be claimed by one parent, so it should usually be the one the children mainly live with.
- Universal Credit, which can help with living costs, housing and childcare if your income is low.
- A 25% single person discount on your council tax if you now live alone or only with children.
- Child maintenance from the other parent, either by agreement or through the Child Maintenance Service.
- Help with court fees if you’re on a low income or receive certain benefits.
How can you rebuild your own financial footing?
Along with the legal side, a few practical steps make a real difference:
- Open a bank account in your own name if you don’t have one
- Work out a realistic budget for life after separation, including the costs you currently share
- Once joint accounts are closed, ask the credit reference agencies to remove the financial link with your former partner, so their credit history doesn’t affect yours
- Update the nominated beneficiaries on your pensions and life insurance too. These aren’t changed automatically by a divorce, and it’s easy to forget.
Why does a court order matter?
Whatever you agree, make it legally binding. An informal deal isn’t enforceable, and without a financial order either of you can make a claim against the other even years after the divorce. A consent order records your agreement and, once a judge approves it, the court fee is just £62. It can include a clean break, ending financial claims between you for good.
Our complete guide to divorce financial settlements explains how courts divide assets. If you’d like a rough picture of your own position first, our free Divorce Settlement Calculator is a good place to start.
Protect your financial future after divorce
The decisions you make about money during a divorce can shape your finances for decades. Agreeing too quickly, overlooking a pension or leaving a deal unrecorded can leave you struggling long after the divorce itself is over.
At Osbourne Pinner, our divorce and family law solicitors help clients understand what they’re entitled to and reach settlements that meet their needs now and in the future, including pensions and maintenance. We’ll explain your options in plain English and give you a clear view of costs before you commit to anything.
Please note that this article is for informational purposes only and does not constitute legal advice. We always recommend speaking to a qualified solicitor for advice tailored to your specific circumstances.
We offer a free 30-minute consultation to discuss your situation, Monday to Friday. You can speak with us via video call or visit our offices in Piccadilly Circus, Canary Wharf, Wimbledon, Harrow or Manchester. To arrange your consultation, call 0203 983 5080, email [email protected] or complete the form below. We do not offer Legal Aid.
