What Divorce in Retirement Means for Your Pension
Perspective One: You work your entire life to provide your wife and kids with luxuries you never had as a child. You put in overtime hours so that you can afford the family vacations in Maui and New Zealand, and double time to give your wife the diamond necklace she was eyeing in the jewelry store earlier in the year. You often get home after the kids are in bed and before they wake up because it means that the ensuing promotion will provide you with just enough to upgrade from your starter home to your forever home. On top of it all, you manage to stash away some savings each month into a pension plan, so that you and your wife may retire comfortably.
Perspective Two: You married and had children young, and while you dreamt of becoming a nurse practitioner, your husband’s long hours and the needs of your young children kept you at home. You held out hope on being able to go back to school and become financially independent, but with every promotion that your husband got, the household and child-rearing responsibilities fell more and more on you. When the kids were finally old enough to take care of themselves, you were middle aged, without an income or backup plan in place.
Now imagine that the couple described above got divorced post-retirement, after the kids were grown and gone, and after 30 plus years of marriage. What would become of the woman, who had no savings to speak of? Would the hardworking man be entitled to his entire pension, or would he have to split half of it with his former wife?
Splitting Your Pension
Today, one in four couples divorce after age 50, according to Financial Advisor. Some people attest this to spending more forced time together and realizing that you really have nothing left in common, while others attribute the high divorce rate to tighter living expenses and less disposable income. Whatever the reason for your post retirement divorce, you can count on splitting your pension with your former spouse. There are three ways to do this:
- Offsetting: Offsetting occurs when one spouse keeps the entire pension, while the other takes physical properties, such as the house and cash. However, if you choose to go this route, the amount of physical property given to one spouse must be equivalent to the amount of the pension that they are entitled to.
- Splitting the Pension: Splitting the pension involves exactly that—splitting the pension. One half of the savings will go to the wife, while the other will go to the husband. The non-owner of the pension may choose to keep his or her share in the original pension, or they may choose to place it in another scheme. If they choose the latter, neither party will be taxed for removing money before the pension holder is of a certain age – as many pension plans dictate.
- Earmarking: Earmarking is less common, and occurs when the pension holder has a part of the pension attached to his or her former spouse, thereby making the former spouse entitled to that portion.
How Much Will They Get?
How much of your pension your former spouse is entitled to all depends on what your pension is valued at. You will need to speak with a financial advisor prior to your divorce hearing to determine your pension’s worth.
At our law firm, our divorce attorneys will evaluate your former spouse’s living expenses and determine what percentage of the fund will cover those living expenses. Typically, the judge will use that determination, along with the pension sharing plan, as a basis for setting a final amount.
Consult a Boca Raton Divorce Attorney
If you are in the midst of a post-retirement divorce, and if you are worried about having to split your pension with your former spouse, the divorce attorneys at the Law Offices of Schwartz | White can help you settle the matter in a way that is fair and beneficial to both parties. To consult with one of our Florida divorce lawyers, contact our family law firm at 561-391-9943 or online today.