Divorce doesn’t just change your relationship status—it reshapes your financial future. For many women, the end of a marriage is also the beginning of a new financial reality, often involving complex decisions around settlements, pensions and long-term planning.
If you’re navigating this transition, it’s essential to recognise that retirement planning after divorce presents its own unique set of challenges. These aren’t insurmountable—but they do require clear thinking, good advice and a steady hand.
Here are the key financial challenges divorced women face when planning for retirement—and how to approach them with confidence.
Lower Lifetime Earnings = Smaller Savings Base
Women typically earn less than men across their working lives—often due to career breaks, part-time roles or time out for caregiving. That gap doesn’t just affect your pay packet; it compounds over time in the form of smaller pensions and lower retirement savings.
According to the U.S. Census Bureau, the gender earnings gap costs women over $400,000 across a 40-year career. In the UK, women’s average pension pot at retirement is just £20,000—20% lower than men’s. If you’ve gone through divorce, that pot may be further eroded by the need to divide assets.
This makes it essential to take control of your retirement planning as early as possible post-divorce. A clear strategy can help you catch up and stay on track—even if you’re starting from a smaller base.
Dividing Retirement Assets Can Leave You With Less Than You Think
In both the UK and US, pensions are typically included in divorce settlements—but the outcome can vary widely depending on how they’re handled. In the UK, pension sharing orders allow a portion of one spouse’s pension to be transferred to the other, often between 30–50%. In the US, retirement accounts like 401(k)s and defined benefit pensions are divided using a Qualified Domestic Relations Order (QDRO), allowing a share to be passed on without early withdrawal penalties.
While this can provide a crucial foundation, it’s often less than expected—and it may not grow without active management. Many women come away from a settlement thinking they’re financially secure, only to realise later that the pension value received won’t fully support them in retirement.
A professional review of what you’ve received—and how best to make it work—can make a significant difference to your long-term outcome.
Emotional Stress Can Cloud Financial Judgment
It’s normal to feel emotionally overwhelmed during or after divorce. But major financial decisions made under stress—like cashing out pensions, accepting a lump sum without understanding the implications, or ignoring the investment strategy of your new assets—can have lasting consequences.
A Legal & General report found that women’s household income drops by an average of 33% after divorce. This reduction, coupled with emotional pressure, can lead to financial choices based more on short-term relief than long-term security.
Taking time to pause, reflect and seek advice—especially before agreeing to a final settlement—can help ensure your decisions support your future, not just your present.
Lack of Experience With Investments Can Be a Hidden Vulnerability
Many women defer investment decisions to their spouses during marriage. After divorce, that can leave you facing a steep learning curve—often with significant assets to manage.
In a recent survey by Morgan Stanley, 64% of women said they had never invested. This lack of experience doesn’t mean lack of ability—it just means you may need guidance to feel confident in managing your settlement.
Whether you’ve received a share of a pension, a cash lump sum or a property asset, these all need to be managed to produce long-term income. That might mean learning how to invest wisely, understanding drawdown strategies, or protecting your money from inflation and tax.
The good news? With the right support, many women become highly competent and confident investors in this new phase of life.
Get Advice Before You Finalise Your Settlement
If you’re currently going through a divorce, it’s vital to seek financial advice before agreeing to a final settlement. Once the paperwork is signed, it’s very difficult—and often impossible—to make changes. Understanding the full value of pensions, property and long-term investments, as well as the tax and income implications, can help ensure your settlement truly supports your future.
Too many women accept what looks fair on paper, only to find it doesn’t translate into lasting financial security. A financial planner can help you see the bigger picture and negotiate from a position of clarity and strength.
Why All of This Matters at the Settlement Stage
By the time the divorce papers are signed, many women have already accepted settlements that don’t fully account for their future retirement needs. It’s understandable—divorce is draining, and there’s often pressure to move on quickly. But the decisions you make at this point will shape your financial security for decades to come.
This is why it’s so important to approach your settlement with a strategy—not just for survival, but for long-term strength. That means:
- Knowing what you’ll need to retire comfortably
- Understanding the true value and liquidity of your assets
- Considering future risks like inflation, tax and longevity
- Putting a plan in place to make your settlement work hard for you
You don’t need to be an expert—but you do need to take control. And you don’t have to do it alone.
Let’s Talk About Your Next Chapter
If you’re navigating divorce or adjusting to life post-settlement, I’d be happy to help. I offer a free, no-pressure consultation to talk through your financial position and help you build a clear plan for retirement—tailored to your life, your goals and your future.
Book your free consultation today and take the first step towards financial confidence in your next chapter.
