Research released today, by digital wealth manager, Moneyfarm reveals as many as 27 percent admit that their financial situation is the only thing stopping them from leaving their partner.
Eighteen percent claim getting a divorce is out of the question, because it’s too expensive in the current climate, while 17 percent say they wouldn’t be able to afford to hire a solicitor to help them with the split.
A further 17 percent of those surveyed profess they would never have enough money to buy their own home, while 16 percent wouldn’t have enough income to move into a rental property.
Chris Rudden, Head of Investment Consultants at digital wealth manager Moneyfarm comments: “There is no doubt that the process of divorce is costly, with a divorce petition alone typically costing between £500 and £1,500 and that’s before factoring in court costs. Whilst it is incredibly sad people feel trapped in an unhappy relationship because they can’t afford to separate, it is understandable why people find themselves in this situation more than you would think. However, you may be eligible for a fee waiver on the divorce court charge if you have a low income or receive certain benefits.
“Managing a divorce can be an emotional rollercoaster and sadly it’s not uncommon for divorcing spouses not to come to an agreement on how to divvy up finances – with pensions being a particularly tricky area. Therefore, it is important that both sides take advice so the impact and financial fallout can be minimised.”
Financial challenges came out top of the list as the biggest marital problems, with 22 percent, followed by lack of communication, lack of intimacy, and a partner having personal problems.
The research also found that 43 percent of those polled are convinced they would not get a fair settlement if they divorced their partner, and a further third have no idea if they’d come out with what they financially deserved.
Not surprising then, that 13 percent admit that if they won the lottery, the first thing they’d do would be to divorce their partner – with 38 percent of those surveyed saying that if they could go back in time, they wouldn’t have married their current spouse.
Top 5 Tips for How to Handle your Pension in a Divorce
1. Find out how much your pensions are worth
Even if you aren’t divorcing, knowing your pension is a good starting point for planning your future. The state pension is accrued naturally for each person, and it could be shared or not in a divorce. If you haven’t yet reached state pension age by the time you get divorced, the pension will probably be all for you.
2. Share your pension information with your (soon-to-be-ex) partner
If the pension won’t be shared because you will receive a larger share of the house or other assets instead, work out how much any pension savings you’ve built up separately are worth. This is crucial: different assets have different ways of providing value to you.
3. Work out if you need expert help
Any workplace or private pensions should be taken into account when settling divorce paralegal practitioner or divorce attorney. In Scotland it is simply the assets accrued over the time of the marriage, however in other parts of the UK it can be the entire pension pot. This is often to compensate for one of the parents making some career sacrifices during the marriage period – to raise children for example. The key question in retirement is where is my income going to come from and how much will it be. If you have received some assets that may have a different structure, like a house, then you may need to make a different plan to the tradition pension drawdown.
4. Know your options once you know the value of your pensions
If the pension(s) were shared when you got divorced or dissolved your civil partnership, check how much your pension(s) are worth now and work out how much you might be able to retire on. It is important to have a plan in place for your retirement. Knowing how much you can have at the point of retirement will determine your income through retirement and you can plan your life accordingly.
5. How best to reach an agreement with your (soon-to-be-ex) partner
Before reaching an agreement you should think about your economic needs at retirement age. Where will you live? With who? Doing what? How much it is likely to cost you to live the way you want? Agreement should be consistent with your future needs, your pensions and the assets you will eventually receive. You may also consult a divorce corpus law firm to guide you regarding these agreements.