The number of divorces in the over 60 age group has rocketed by 49% since 1981, so many more elderly couples are having to sell their family home to pay for their new lives alone, says Safe Home Income Plans.

But its the women divorcees over 60 are losing out financially due to the recession. SHIP says there are 13,678 people over 60 who divorce annually, but due to the housing market crash, couples who sell their property to divide their assets could lose up to 22.5% of the value of their home when it’s time to sell, having serious consequences for their retirement income.

The trade body estimates that women are losing over £18,200 in lifetime income after a split. When it comes to divorce, a woman’s pension income will fall from £254 a week to £240 a week according to SHIP – a drop of 6% of annual income. This drop can potentially be linked to a variety of factors including many women having less retirement provision than men and fewer sources of additional income. The equity release body also says this dip is exacerbated by the higher costs of running a household alone.

So if it’s not time to sell, but time to find cash, one of the areas that divorcing couples could discuss with their broker is equity release. Many brokers will be able to discuss with couples in this complex legal situation a plan which should allow one partner to remain in the property, whilst providing a steady income that can pay the rent on another property for the other partner.

Andrea Rozario, director general of SHIP, says: “Clearly, pensioner divorce is a pressing issue as growing numbers of older people are deciding that they would prefer to spend their retirement alone. In the current uncertain financial climate, older people should consult with their financial adviser before making any large financial decisions, in order that they consider all available options and ensure the best retirement for both parties.”

SOURCE: SHIP, 05/06/09

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