Consider the Value of a Military Pension During Your Divorce

August 7, 2019

People who have served in the military for years are capable of earning some excellent financial benefits. After 20 years of military service, service members can retire and receive 50 percent of their final salary for the rest of their lives, with those payments being adjusted for inflation. When you consider the fact that the military allows most people to retire at around 40 years of age, those payments can last for a very long time and thus become a very valuable asset to consider when working with a divorce lawyer in Miami, FL to finalize the terms of a divorce.

According to the military’s own estimates, the net value of a pension for a service member at retirement is currently about $200,000 for an enlisted soldier and $700,000 for an officer. The risk-adjusted value is more, when you consider the fact that the payouts are guaranteed for as long as the retired service member is alive. The pension typically becomes an excellent supplement for veterans who go on to other careers.

Who’s getting a pension?

Only 17 percent of active-duty service members remain in the military long enough to collect this pension. In fact, until very recently, service members who left before 20 years of service didn’t get any pension benefits at all, though there are now some small benefits available.

Service members who serve for 40 years, meanwhile, are able to get pension payouts worth 100 percent of their final salary.

As of 2018, there is also now a defined contribution plan that all service members can join, with some of the money they put in being matched by their employer in a way that’s much like traditional 401(k) packages in corporate settings. This allows all military members to leave with some retirement savings built up, even if they only serve the minimum amount of time.

Dealing with retirement benefits during divorce

The way you would handle military retirement benefits during the divorce process is very similar to the way you’d handle retirement benefits for any other type of position during divorce. The factors one would have to consider include the number of years the service member had been earning those benefits before (and then during) the marriage, the length of the marriage, the total amount of benefits and the other arrangements made in the asset distribution process.

Every state in the nation treats a military pension as community property, so it is eligible to be divided between the spouses. The rules for that division changed in 2017, and no longer is it automatically a 50-50 division. Now, the pension division during the divorce process is based heavily on the rank and time of service for the service member at the time of divorce, plus cost of living adjustments. This only applies to divorces that were finalized after that new legislation, however.

To learn more about how military divorces work, particularly when it comes to the division of benefits, we encourage you to contact an experienced divorce lawyer in Miami, FL at the Law Offices of Granoff & Kessler.

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