Brits risk financial future to start a ‘second life’

More than 8.5 million Brits are risking their savings, pensions and financial future when they split with one partner and begin a ‘second life’ with someone else, according to a major new report from Standard Life.

The Real Second Life report, compiled by trends researchers Next Big Thing, found the financial cost of such a major life change to be substantial, setting people back an average of £20,000 purely to ‘start again’. And for more than three quarters of Brits affected (83%), the financial impact of ending a relationship and starting again was as stressful as – or more stressful than - the emotional fall out.

The research found that after a live-in relationship came to an end, a third of 35 –to-65-year-olds had no pension to their name. Of those with a pension, one in 10 (11 per cent) either had to give away part of their retirement nest-egg, or received some from their ex-partner.

A small number of women come off far better than men when inheriting a pension from their partner, but nearly half of the women questioned (43 per cent) confessed to having no pension at all when splitting from their spouse.

The research also revealed that six in 10 (58 per cent) of second lifers had sold their shared home and split the proceeds. The money, after potentially paying off existing debts and any separation legal fees from the separation, then became the means to start their new life. More than half (55 per cent) of those who have started afresh have entered a new relationship. A third of those cohabiting (33 per cent) have started a new financial commitment by buying a property with their new partner.

Andrew Tully, Marketing Manager at Standard Life, said: “When going through an emotional upheaval like divorce or separation, pensions are unlikely to be at the forefront of people’s minds. But it is crucial to be aware that starting afresh can have serious implications on your financial future; either by having to forfeit part of your pension to an ex-partner, starting a retirement fund from scratch, or beginning a new relationship with new financial responsibilities.

“Our research found that 15.5 million Brits would like to leave their present life and start again. For those planning a second life, it is crucial that they consider the financial implications, save where they can, and seek guidance either direct from the provider or through a financial adviser. Essentially the bottom line is that the more money you can afford to save and the earlier you start saving in life, the more secure your retirement. With changing lifestyles and people living longer, this message has never been more important.”

Standard Life has compiled a list of key points to consider before starting a ‘second life’:

Don't take your pension before you need to. The sooner you take it, the longer it will have to last and the smaller it will be;

If you dream of taking a career break at some stage, try putting more into your pension while you are working so the break does not have such an impact on your final pension fund;

If you have moved jobs frequently it is easy to lose track of your pension benefits. Write to old employers, or contact the Pensions Tracing Service to find out what you might be entitled to;

If you are nearing retirement, or your circumstances have changed, it’s useful to get an idea of what you can expect to receive when you reach state pension age. You can get a state pension forecast from The Pension Service;

There are many demands on your finances - a mortgage, car, credit cards, debt, savings. Working out when, how and the best way to save can be daunting. Taking professional financial advice can help clarify your priorities and your short, medium and long-term financial goals.