Finances after divorce
Important information - the value of investments can go down as well as up so you may get back less than you invest. Tax treatment depends on individual circumstances and all tax rules may change in the future. You cannot normally access money in a SIPP/Junior SIPP until age 55 (57 from 2028). Withdrawals from a Junior ISA will not be possible until the child reaches age 18.
A fresh start
Now that your divorce or dissolution is finalised, you'll be looking forward to starting a new chapter in your life and planning your financial future.
You might have received a large lump sum and/or rights to part of your ex-partner's pension, or you might need advice on rebuilding your pension pot.
Here we look at some of the financial decisions you'll need to consider after divorce and how you can plan for the future.
Review your budget
While preparing for your divorce you might have created your projected budget as a single person. Now that the legal process is over you can check you have set up everything you need for your new financial future, including:
- Saving towards your retirement.
- Paying off any debt.
- Creating an emergency fund with enough to cover three months' worth of your normal living costs. Then if anything out of the ordinary happens, such as the boiler breaking, you'll be able to cover the extra expense.
- Taking income protection in case of long-term illness or disability.
- Setting up life insurance so that your financial responsibilities are covered in the event of your untimely death. This includes your mortgage and providing for your children and/or elderly or disabled relatives.
- If you receive child maintenance or spousal maintenance payments (known as periodical allowance in Scotland), you might want to take out life insurance to cover your ex-partner's life, and their payments.
Take control of your finances
Whether you're investing a lump sum or simply organising your finances, you'll want to save your money in a tax-efficient way.
Every year the government makes this simple with tax allowances you can use when you save money into Individual Savings Accounts (ISAs) or self-invested personal pensions (SIPPs). Not only do both of these accounts benefit from tax-free growth, the government will also top up any money you pay into your SIPP in the form of tax relief. There's a Junior ISA and Junior SIPP for children too.
Learn more about tax-efficient investing.
We can help you take control of your finances through our tax-efficient ISA and SIPP, or, if you need additional support and peace of mind you're making the right investment decisions, our financial advisers can give you the extra support you need.
Saving into an ISA
Open a SIPP
Personal financial advice
Pensions
Following your divorce you may be wondering if you have enough in your pension pot for your retirement.
Our retirement and pension calculators can help you to look more closely at various aspects of your retirement, from planning your goals and your savings, to working out your withdrawals.
If you're thinking about accessing your pension soon and want to understand what options are available, our retirement team can discuss your options or refer you to Fidelity’s paid-for advice service.
You can call the team on 0800 41 41 61.
Updating your details and beneficiaries
If you haven't done so already when you separated, you can update your will and power of attorney.
Although your ex-partner is automatically cut out of your will as soon as your divorce is finalised, the rest of your will remains valid.
If you chose your ex-partner as a beneficiary for any of the following you might want to make updates.
- Expression of wish - who will receive your pension in the event of your death.
- Death-in-service benefits - you might have insurance that pays out a lump sum in the event of your death.
- Workplace benefits - such as health insurance.
If you claim any benefits, you'll need to report your change of circumstances so you keep getting the right amount.
You can also check if you can claim any new benefits as a single person.
You must cancel your Marriage Allowance once you're divorced or your civil partnership has ended.
If you're currently going through a divorce we look at the financial topics you and your legal adviser might explore.
Important information - this information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to one of Fidelity’s advisers or an authorised financial adviser of your choice.
