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Home Lifestyle How births, marriage and divorce affect our finances

How births, marriage and divorce affect our finances

by uma

 

  • There were 694,685 live births in the United Kingdom in 2021 continuing a long-term downward trend.
  • Fewer births mean fewer workers, and this coupled with increasing longevity has put the state pension system under enormous pressure.
  • There were 111,934 divorces among opposite sex couples in England in 2021 – an increase on previous years but this could be due to pandemic delays.
  • Figures for England and Wales show 3,142 divorces among same sex couples -again, a rise.
  • Cohabitees and couples going through a divorce need to ensure their pension rights are considered.

The ONS has published data on births, marriages and deaths Vital statistics in the UK: births, deaths and marriages – Office for National Statistics (ons.gov.uk)

Helen Morrissey, head of retirement analysis at Hargreaves Lansdown:

Births

“This data shows the seismic shifts taking place in our personal lives that have huge impacts on our finances. The number of births continues to drop – it’s dipped below 700,000 per year in recent years, a far cry from the 900,000 plus births per year seen in the 1960s. This may alleviate pressure on would-be parents’ pockets, but its long-term impact is certainly being felt more widely as the burgeoning cost of state pension rests on the shoulders of a decreasing working population. Up to this point, state pension age has been increased to manage these costs but as the government mulls accelerating these increases still further, they need to balance this with people’s ability to work for longer. There’s a sense we are running out of road on how much further these age hikes can go and a new approach could be needed which could spell the end of the triple lock.

Deaths

Sarah Coles, head of personal finance:

“The COVID wave in early 2021 had a tragic impact on the death rate, which aside from the peak in 2020 – hadn’t been so high for more than 35 years (1985). So far, this year’s COVID peak looks far lower, and the worst week in 2021 was nine times worse than the most difficult week this year. However, we’re seeing an awful lot more deaths for non-COVID reasons: the second week of this year saw around a third more non-COVID deaths than any week in 2021.1 This may be the result of people’s health deteriorating during the crisis – whether as a result of a change in their lifestyle or because of delays in receiving care.

Dealing with death is always horrendous but coping with the financial aspects after someone has passed away can make a terrible time even harder. There’s an enormous amount to do, from sorting out energy bills to stopping pension payments, and then going through the miserable business of probate. There’s nothing we can do to make this stage easier emotionally, but we can ease the pain of the financial side of things. Having an up-to-date will and keeping it somewhere obvious can make a huge difference, as can holding a register of assets – where you list everything you hold and all your accounts, so they are easier to track down. If you have sentimental items you want to leave, or specific instructions for the funeral, it’s also worth putting them in a letter of wishes kept with the will, so your loved ones don’t have to worry about what you would have wanted.”

Marriage and divorce

Helen Morrissey, head of retirement analysis:

“We saw a bit of a spike in divorces in England in 2021, though this may be due to pandemic related delays – they are still nowhere near the heights we saw in the 80s and 90s. This may, of course, be because people are less likely to marry now – many prefer to cohabit. This all brings its own set of challenges. Cohabitees may live together for many years and bring up families together but if they split or one partner dies the other may find themselves with few, if any, rights. It is hugely important for cohabiting couples to keep wills updated so their partner gets their fair share of any estate though, they won’t benefit from any transferable allowances aimed at spouses, such as inheritance tax. Expression of wish forms for pensions must also be updated to make sure your partner gets any death benefits. Not keeping these updated risks another person -such as an ex-partner – getting these benefits and leaving your loved ones struggling.

Anyone going through a divorce must also ensure all assets are considered. In some relationships, one partner may choose not to build up their own pension because their spouse has generous entitlement. If they stay together then that works but if you don’t, you may find yourself approaching retirement with little if any pension wealth. It is hugely important assets, such as pensions, are considered as part of any divorce settlement.”

 

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