More people are divorcing later in life – new project to study the consequences

Divorces later in life are becoming increasingly common in Sweden. Over the past few decades, the number of divorces among people over 50 has risen sharply – at a much faster rate than among younger people. What are the long-term consequences for this? A new research project at Jönköping International Business School (JIBS) at Jönköping University will investigate the phenomenon.

The project is led by Johannes Hagen, Senior Associate Professor in Economics at JIBS, and has been awarded SEK 6.6 million from the Kamprad Family Foundation. The aim is to increase knowledge of the economic and social consequences of so-called “grey divorces” – a phenomenon that has become increasingly common, but which remains relatively unexplored.

“The proportion of older people getting divorced has risen by over 50 per cent in the last 25 years, whilst the proportion has remained stable, and even declined, among younger age groups. Despite this, we know little about what is driving this trend and what consequences it will have for people’s finances and life circumstances in the long term,” says Johannes Hagen.

A divorce later in life differs in several ways from a separation earlier in adulthood. As people approach retirement, there is often less opportunity to recover financially. At the same time, many have already left the workforce or have limited opportunities to increase their income.

Can have lasting financial consequences

A particularly important factor is the pension. Unlike, for example, housing and other assets, pension capital is usually not divided in the event of a divorce.

“This means that a separation later in life can have significant and lasting financial consequences, particularly for the person who has had a lower income, which is often the woman,” says Johannes Hagen.

As women on average have lower lifetime earnings and consequently lower pensions, they risk being hit harder financially by a divorce in later life. This, in turn, can affect their ability to remain in their home, manage everyday expenses and feel financially secure during retirement.

The research project will also help to better understand how people react when a divorce occurs later in life.

“We want to understand how people react when a divorce occurs. A divorce can, for example, lead people to choose to work longer or postpone drawing their pension to strengthen their finances. Others may be forced to money out of their pension earlier than planned to cover everyday costs, which in turn can have negative consequences later in life,” says Johannes Hagen.

New knowledge to inform advice and pension planning

The project will also highlight the role that prenuptial agreements play in determining the extent of the financial consequences. By regulating in advance how assets are to be divided, such agreements can reduce financial uncertainty and, in some cases, protect the financially weaker party. They can also increase differences in assets, depending on how they are written. However, depending on how they are designed, they can also increase inequalities in assets.

“Through this new research project, we aim to contribute to a better understanding of the consequences and risk factors associated with late-life divorce, as well as how individuals can receive better support in connection with such life events. The project is being carried out in collaboration with SPF Seniorerna, which strengthens the research’s relevance and the potential to reach a wide audience with our findings,” says Johannes Hagen.