The Intermediary – February 2026 - Flipbook - Page 77
L AT E R L I F E L E N D I N G
Opinion
Later life divorce
is reshaping
retirement plans
W
e oen
speak of the
implications of
living longer
lives, with
people working
for longer and having to make their
retirement income stretch further.
It’s partly because of our longer
lifespans that the exit from the
workforce and into retired life is no
longer a single milestone moment for
many, but a phased exit. But that’s not
the only milestone moment that is
increasingly taking place in later life.
L&G’s research has shown that just
under a fih (17%) of all divorces take
place in later life.
Those who decide to separate at this
stage in life can find themselves in a
difficult position as they draw closer
to retirement and their ability to
earn decreases.
The financial impact of later life
divorce is stark. A quarter (23%) of
those who divorce at age 50 or over
expect to live on a lower income in
retirement than originally planned, a
third (32%) will need to downsize their
home as a result, and one in five (20%)
say they may no longer be able to leave
an inheritance.
Equally, despite the significant
financial challenge a divorce in later
life can pose for those approaching
retirement, only a quarter (25%) of
those who divorce in later life include
pensions in selement discussions,
and almost a third (31%) waive rights
to their partner’s pension entirely.
While divorce is a highly emotional
time, it’s crucial to consider its
financial impact from all angles. This
is particularly the case with property
wealth for separating couples.
The role of property wealth
Property is top of mind as an asset
for divorcing couples, with 63% of
those who divorced aged 50 and over
considering it as part of the separation
process. Not only is the family home
a place of financial value, it also holds
significant sentimental value.
L&G’s research also found property
wealth (including via equity release)
plays a key role for some in the
separation process, with 14% of those
who divorced in later life using the
money from a property (either its sale
or via equity release) to fund their
separation. For some (5%), equity
release played an important role in
allowing them to stay in the home
they had grown to know and love, as
they used it to buy their partner out so
they could keep the property.
Where advice is key
The later life lending space is taking new shape
While it’s clear that property wealth
plays a key role in the separation
process, it’s important that divorcing
couples are well informed at every
juncture. L&G’s research found that
just 8% of those who divorce at 50
or over seek financial advice before
making these decisions. Seeking
LORNA SHAH
is managing director at L&G
Retail Retirement
financial advice enables separating
couples to ensure they’re considering
all avenues and opting for the best
of course action for them. This is
particularly the case as the later life
lending space undergoes ongoing
product innovation.
While drawing on property wealth
may make sense for some people who
find their retirement income stretched
following a divorce in later life, it
may not be right for everyone. For
some people, downsizing may make
more sense, and this is the juncture
in which financial advisers can really
demonstrate their value.
Working with a financial adviser
allows divorcing couples to ensure that
if they do decide to draw on the money
tied up in their home – either as
part of the divorce process or to fund
requirements during their retirement
– they are doing so in a way that best
suits their individual circumstances.
Everyone’s needs are unique, and
this is even more important for those
approaching retirement as they
consider what their goals are and what
a rewarding retirement looks like.
While later life divorces can be
financially challenging, ensuring
that clients are set up to have the right
conversations with the right people at
the right time can beer position them
to achieve their retirement goals,
supporting them to explore every
avenue from their pensions to their
property. ●
February 2026 | The Intermediary
75
