Many women will put their career on hold to build a home and bring up children. It’s a life choice that can seriously impact on their earnings potential, whereas their partner’s career progression can continue unimpeded.
How, then, should assets be split if a couple in this situation get a divorce? What is the financial situation for the average divorced woman in the UK? Are women getting their fair share when the divorce settlement is agreed? And if not, why not?
Divorce ‘a Significant Financial Risk’ for Women
The Chartered Insurance Institute (CII) describes divorce and separation as a “significant financial risk” for women. This, it said, is because women who are divorced or separated tend to have lower levels of savings than their male counterparts, while the average divorced woman has less than a third of the pension wealth of the average divorced man.
In fact, most separated women don’t have any pension wealth at all and are therefore much more likely to rely on the State Pension.
According to the Office for National Statistics, the average age at divorce for women now stands at 42.6, while an increasing number of couples are splitting up in their 50s. The CII believes women separating from their partners at this point in their careers are at particular risk of financial hardship, as they don’t have many working years left to build up a savings or pension pot of their own.
Figures from the CII show that a typical woman who expects to rely on a partner for income in retirement has just £8,335 in pension wealth, which means they could struggle to make ends meet if their relationship breaks down. While 41% of men expect a personal or work pension to fund their retirement, just 31% of women expect the same.
To discuss your financial situation with a Divorce Solicitor, please get in touch.
Women ‘Do Worse Out of Divorce than Men’
There’s a popular view that it’s men who get “taken to the cleaners” in divorce, especially when there are children involved. However, Nigel Shepherd, chair of mediation body Resolution, believes this “generic perception” is “trite”, stating it’s actually women who tend to “do worse out of divorce”.
Speaking to the Guardian, he said he doesn’t believe it’s a failing of the system that penalises women. Instead, Mr Shepherd argued that the issue is a woman’s ability to recover financially after divorce, which he said “reflects the wider inequality in society”.
“A couple who have been married 30 years and divorce in their mid-50s may split everything equally, but there is still a built-in inequality in the ability to rebuild from that point,” he observed. “We are seeing cases where the man is the lower earner but that’s not the normal way round; men are more likely to be the earners and divorce is not designed to be equal forever. You go into it unequal and end up unequal.”
Dalia Ben-Galim, director at single parents’ charity Gingerbread, added that long-standing taboos around divorce and separation are also impacting on divorced women.
“One in four families in Britain is a single-parent family, and yet we still have our politicians holding up marriage, through policies like the married tax allowance, as this ideal,” she commented. “People feel they are failures if their relationship has failed. The reality is that people’s status changes throughout their adult lives for a whole range of reasons, not all of them within their control.”
The time women spend out of work can make it hard for some to get back into employment. And if they’ve been at home for several years, they could find their skills and capabilities are out of date when they’re actively looking for job opportunities. Maintenance terms can help with this but the tide has turned against joint lives orders after the financial crash so woman have to “adjust to independence” far quicker. The reality is some never will or will struggle to within the allotted time and may end up with a much reduced standard of living when that income support drops out.
A much greater focus must therefore be placed on their ability to get back on their feet in the aftermath of a divorce, with their contribution to the main breadwinner’s family being acknowledged to ensure they don’t lose out.
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