Expectations are running higher & higher in the post retirement arena as we see the growing influence of the “40-year itch” - divorce.
Here we attempt to look into the fundamental reasons for this remarkable divorce trend & the options available to people in this increasing common situation.
Since 1981, the overall divorce trend in the UK has reduced by 12 per cent, but amongst the over 60s, it has risen significantly, by 49 per cent!
Statistics show that some 13,678 people over the age of 60 now divorce annually, which means that those forced to sell their property to divide assets risk losing up to 22.5 per cent.
This has been exacerbated by the recent fall in property prices & left many pensioners left with a financially difficult decision to make regarding their main asset - their property.
However, what can be the reasons for post retirement divorce in the first place?
We know that longer life expectancy and better health in old age had heightened people’s ambitions for their retirement.
Retiree’s are now embarking on journeys to previously unchartered territories. Gone are the 9 - 5 daily routines & constant attention to the children.
A new lifestyle & opportunities now arise that were until now out of reach, mainly due to monetary & time constraints. Cruises & distant travel destinations around the world are now becoming commonplace as post retirement couples fulfil their working life fantasies.
With the escalation in property values over their working lives, pension schemes & now the advent of equity release, many pensioners are finding themselves in an ever more affluent situation.
However, the story isn’t always as rosy as it seems.
Retirement is also triggering a delayed equivalent of the mid-life crisis, as people take stock of their lives so far and realised how much they still wanted to do.
Married couples are also realising they had little in common when they start spending more time with each other, particularly once the children have moved on.
Other scenario’s are also being brought to the fore as reasons for the later life divorce rate.
Incredulously viagra has been cited as a catalyst for this; the reasons for this fall outside my realms of this discussion topic!
However this may be why divorce statistics show more husbands than wives are divorcing after 60 years of age?
Nevertheless, it is many of these modern day advances including the growth rate of the online ’silver surfers’ & the acceptance of new technologies that are now driving this divorce rate phenomenon.
In divorcing, it has been found that pensioners were not necessarily wishing for the freedom they had when they were single. Most older people were not leaving an existing relationship unless they think there’s is an opportunity for another one.
The emotion wrangle that younger divorcee’s partake in you would imagine would be less so for an older couple - not so.
When younger couples divorce the arguments are usually over custody of children or bitterness about infidelity. However, divorces between pensioners were frequently even more acrimonious than those between younger people. This can be attributed to family politics & the fact that both parties try to recruit their children onto their side.
However, with family politics & the acrimonious nature of divorce aside, concern over finite resources meant pensioners are more reluctant to spend money on protracted divorce proceedings in the courts.
With pensioner divorce there is a definite reluctance to see the costs escalating.
There is a concern that divorcing now means a shortage of assets.
A pension may have been enough whilst they were both living together, but if there isn’t enough to keep them both at the same standard of living when apart, it can be very unpleasant.
So how can these financial implications be alleviated on divorce?
Obviously, there are many issues to post retirement divorce & in the current uncertain financial climate, older people should consult with their financial adviser before making any large financial decision. Good legal and financial advice could help avoid significant losses.
Nevertheless, one increasingly common solution is equity release.
This might provide a short-term solution to divorcing during the credit crunch. As stated previously with lower property prices and low numbers of house sales are making it more difficult for pensioners who are separating to sell their home.
This incurs difficulty in making a division of partners wealth, or those who do sell could find they get 22.5 per cent less due to the housing market falling to such a great extent.
Equity release could provide an alternative option to an immediate sale of the house. This works by preventing sale of the house immediately & delaying it until a time when hopefully house prices will have escalated back to the levels of 2008. It would prevent divorcing pensioners from being even worse off as a result of current economic conditions.
Therefore, the equity release solution will allow them to separate while avoiding further financial loss until the housing market picks up again.
Equity release schemes could also provide sufficient income for one half of the couple to move out and rent another property to live in, while the other remains in the property. This alternative arrangement could also allow for the family to retain ownership of the property, as the loan can be paid off at a later date.
However, this would be dependent on age and property values as the amount that can be taken out on such equity release schemes is limited. Therefore, the older the divorcee’s are the more that can be released & also more likely to be a solution to the capital inadequacies that arise.
It has also been stated that female retiree’s suffer the greatest financial loss after divorce. It has been estimated they could lose six per cent of their annual retirement income & this can be attributed to women having less retirement provision in place and fewer sources of additional income.
Coupled with these difficulties is the reduction in the savings interest rates and pensions that has already reduced the amount of monthly income pensioners have. Therefore, the higher cost of running a household budget on one income in retirement reveals the hardships that could be experienced by divorcing in retirement.
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