Getting divorced shouldn’t have to cost you the chance to retire. However, that’s exactly what many people worry about when they have a spouse who earned a pension or other retirement benefits. If they end the marriage, and they haven’t saved up their own retirement fund, do they lose everything?
The answer is that you can often seek to get a portion of that fund in the divorce, as it counts as a marital asset. You do so with a Qualified Domestic Relations Order (QDRO). Rather than deciding which one of you keeps the asset, the QDRO assigns a percentage to each of you.
What percentage of the pension will you get?
It is important to note that every case involving a QDRO is unique. The government notes that numerous factors have to be considered and no two situations are the same. Dividing up the account in question is not as simple as stating that everyone with a QDRO gets 50% of the retirement benefits or something of that nature.
For instance, the duration of the marriage plays a role, as do the start and end dates on which the plan is earned. Say that the plan takes 20 years to be fully earned. For the first five years, your spouse was single. You then got married for 10 years. For the next five, after the divorce, they’ll be single again.
This means that, even if you expected 50% of the asset, you may only get 25% of the total. The marriage lasted only for half of the time that the pension was earned, and you have a right to half of those earnings. Naturally, each relationship will have very different numbers and various other factors that enter into the equation and the results.
Defending your future throughout the divorce process
What is important to know is that you do have a right to marital assets in your divorce like retirement benefits, which some people tend to overlook. Make sure you know what steps to take to get what should be allotted to you. You want to do everything you can to be on a stable financial footing in the future.