Financial planning during divorce: what you need to consider

Quick answer

Financial planning during divorce can help you make informed decisions and feel more confident at a time of uncertainty. By looking at your assets, debts, income and expected spending, you can assess how a proposed settlement might affect your finances now and in retirement. Seek legal advice, financial advice or specialist pension input where you need help weighing up your options.

Introduction

Divorce can leave you facing major financial decisions at a time when you’re already struggling with everything else. If money is one of your biggest worries, you’re not alone: a YouGov survey found that 51% of divorced UK adults identified money among their biggest fears during the process.¹

You may be wondering whether you can afford to keep your home, how you’ll manage on one income, how divorce will affect your lifestyle or what you should agree to when it comes to pensions. This guide explains what to consider before agreeing a financial settlement and where professional help could make those decisions clearer. The legal information relates to England and Wales; different rules apply in Scotland and Northern Ireland.

Preparing financially for divorce

When you’re worried about where you’ll live or how you’ll pay the bills, gathering paperwork may feel like another burden. But having a clear picture of your finances can make those questions easier to work through. It gives you both a basis for discussing a settlement and checking whether it would meet your needs now and in the future.

You don’t have to decide how everything should be divided at this stage. First, gather details of what you each own and owe, alongside your income. Include everything, even if you’re unsure how it will be treated in the settlement.

What to gather

Property: current values, mortgages and other secured borrowing.
Savings and investments: bank accounts, ISAs, shares and other holdings.
Debts: loans, credit cards and other commitments.
Income: earnings, benefits, pension income and other regular payments.
Business interests: ownership stakes, estimated values and any related debts or personal guarantees.
Pensions: workplace and personal pensions, including those from previous jobs.

Pensions are easily overlooked because they’re held in one person’s name or because retirement feels a long way off. You may also feel that a pension you’ve built up through your own work belongs solely to you. But pensions need to be included in financial disclosure and considered as part of the settlement, regardless of whose name they’re in.

Working out your living costs

Alongside those figures, estimate what you’ll need to spend after separation, including housing, bills and everyday costs. You may not yet know where you’ll live or what every expense will be but even an estimate is useful. Note anything you’ll need to check as your plans become clearer.

Can you afford to keep the family home?

Wanting to keep the family home is understandable. It may offer familiarity and stability, particularly if you have children with established routines, friendships and links to school. Make sure your consider all of the costs associated with home ownership when weighing this up. Don’t forget to factor in Council Tax, utilities and insurance, and set money aside for maintenance and repairs. As a rough budgeting guide, the National Residential Landlords Association suggests setting aside around 1% of the property’s value each year for maintenance and repairs.²

Think carefully, too, before giving up pension rights to keep the property. You could retain a valuable home but have too little accessible money for emergencies or too little income in retirement. Your age, earning capacity and time to rebuild pension savings all matter when considering whether to offset pension rights for property. A Pension on Divorce Expert can help you understand the pension benefits you would be giving up before you agree to an offset and help arrive at a fair offset value.

For more on the emotional, legal and financial considerations involved in this complex issue read Guided Financial’s guide to deciding whether to stay in the marital home after divorce.

Why pensions matter in divorce financial planning

Pensions can be among the most valuable assets in a divorce. Yet they are easy to overlook because they don’t feel as immediate as a home or as tangible as money in the bank.If one person has a substantial pension and the other has very little, that difference could shape their lives for decades. Understanding pensions starts with knowing what kind you have:

Defined Contribution pensions build up a pot of money. Its future value and the income it can provide depend on factors including contributions, investments, charges and how you use it.

Defined Benefit pensions, including many final salary and career-average schemes, promise benefits calculated under the scheme’s rules, often based on earnings and service.

Ask each pension provider for a valuation for divorce purposes, usually called a Cash Equivalent Value (CEV) or Cash Equivalent Transfer Value (CETV). It is a starting point, rather than a complete picture of what the pension could provide.

For Defined Contribution pensions, the CEV is often a reasonable guide. For Defined Benefit pensions, it may not reflect the value of the guaranteed income and other benefits the scheme provides, so specialist interpretation can be particularly important.

Two pensions with similar headline values may provide very different retirement benefits. Equally, dividing their stated values equally will not necessarily produce equal retirement incomes.

A Pension on Divorce Expert (PODE) analyses those differences and explains the implications of pension sharing or offsetting. This gives both people a clearer basis for making decisions and can help prevent costly mistakes.

How can pensions be divided during divorce?

There are three main approaches. Which is appropriate depends on your pensions and the wider financial settlement.

Pension sharing transfers a percentage of one person’s pension rights to the other, creating a separate pension entitlement. This requires a court order, not just an agreement between you. Read our guide to Pension Sharing Orders.
Pension offsetting means one person keeps more pension while the other receives more property, savings or other assets. Read why pension offsetting is not as simple as it looks
Pension attachment directs part of a pension’s future payments to a former spouse, rather than creating a separate pension entitlement. It does not provide the same clean break as pension sharing.³

Before agreeing a split or trading pension rights for property, understand what each option could leave you to live on, and when. An equal division of stated pension values does not necessarily produce equal retirement incomes.

Planning for your financial future after divorce

Check whether the proposed settlement would cover your living costs immediately after your divorce by preparing a realistic budget for your household after separation. Include housing, utilities, food, transport, childcare, insurance, debt repayments and irregular costs, not just the bills you currently pay personally.

Then look further ahead:

Will your income change as children grow up or maintenance arrangements end?
Will you have accessible savings for unexpected costs?
How much pension income are you on track to receive?
Could you afford to retire when you had planned?
What happens if you cannot work for as long as expected?
Your age, health, earning capacity and time until retirement can all affect the options available.

Check your State Pension forecast as well as private pensions. The basic State Pension and the main part of the new State Pension cannot be shared, but some Additional State Pension or a protected payment may be shareable, depending on your circumstances.⁴ Differences in your expected State Pension income may also need to be considered when assessing a settlement.

Legal and financial advice during divorce

Different professionals can help with different parts of your divorce. Although their work can overlap, each has a distinct role.

A Solicitor advises on your legal position and helps you formalise the settlement. However, the 2023 Fair Shares study found that only two in five divorcees in England and Wales used a lawyer for information, advice or support during the divorce process.⁵

A Financial Adviser acts for you individually, helping you assess affordability, plan your spending and understand how different settlement options could affect your finances now and in retirement. Some offer support specifically during divorce; others continue working with you afterwards.

A Pension on Divorce Expert (PODE) focuses on the pensions, providing specialist calculations for pension sharing or offsetting. Often jointly instructed, they act impartially for both parties. Their PODE report helps you and your legal advisers understand the pension options and make informed decisions about how to share or offset them.

When might you need a PODE report?

Not everyone getting divorced needs a PODE report. Not even everyone with a pension always needs one. But specialist analysis can be a financial game changer if:

Either of you has Defined Benefit pensions or complex pension arrangements.
You are considering property or savings instead of pension rights.
There are substantial differences in your pension provision, ages or expected retirement incomes.
Your solicitor or the court has requested expert evidence.

A PODE report helps you understand what different pension sharing or offsetting options could mean for your long-term financial future.

Not sure whether you need a PODE report?

Our free assessment helps you understand whether specialist pension analysis could be useful in your circumstances, which report may be appropriate and what to do next. If expert input could help, you’ll also be offered a free 10-minute clarity call with one of our pension experts.

Take the free assessment

FAQs

No. In England and Wales, the final order ends your marriage but does not, by itself, settle your finances or dismiss financial claims. An informal agreement is not the same as a legally binding financial order.⁶ Get legal advice about formalising your settlement and whether a clean break is appropriate, even if you agree and are handling the divorce yourselves.
Start with previous employers, old pension statements and correspondence from providers. If you have lost track of a scheme, the government’s free Pension Tracing Service can help you find contact details using an employer’s or provider’s name. It does not confirm whether you have a pension or what it is worth; you must contact the scheme to establish those details.
Yes. Cash-flow modelling can help explore how different settlement proposals might affect your finances over time. A financial adviser can test assumptions about spending, inflation, investment returns and retirement dates to identify potential shortfalls. These forecasts are not guarantees: ask which assumptions drive the results and what happens if circumstances are less favourable than expected. They inform decisions rather than determine your legal entitlement.
MoneyHelper offers free, impartial guidance, including pensions and divorce appointments, to help you understand the options and prepare questions. Guidance is different from personalised financial advice, legal advice or a PODE’s calculations. It can be a useful starting point if you are not yet sure what help you need.

References

Irwin Mitchell, YouGov survey on divorce concerns (2024).
NRLA, Annual home maintenance checklist (2025).
MoneyHelper, How to split pensions in a divorce.
GOV.UK, State Pension and divorce.
University of Bristol, Fair Shares study (2023).
GOV.UK, Getting a financial agreement.