Many married couples spend the majority of their working years together and save as a unit toward the costs of retirement. In theory, mutual savings and a shared household during retirement can help to keep costs manageable.
Unfortunately, if couples do not make it to retirement together, they will have intertwined retirement resources that will complicate their divorce process. Both spouses may worry about what the separation of their assets will mean for their financial stability and independence during their golden years.
Savings are often partially marital property
Some people specifically protect their retirement resources before marriage by earmarking them as separate property in a marital agreement with their spouse. However, most people do not take this proactive step and will therefore need to establish how much of their retirement savings are actually separate property and how much is marital property that is subject to division.
Contributions made throughout the marriage, including contributions made by an employer as a benefit, will be subject to division in the divorce. Contributions made prior to marriage will typically remain separate and not subject to division.
In some cases, the courts will order the spouses to divide the accounts. Other times, one spouse may keep all of the retirement savings but have to give up other property that has a comparable value. In some cases, the courts may even order alimony as a means of dividing a pension that is payment-based rather than account-based.
There is no rule that decrees an account is automatically subject to division. Instead, it may be divided as part of the process of creating an equitable or fair division of someone’s property.
What about a military pension?
Those who have served in the military or who married a service member often feel unsure of what rights they have when it comes to a military pension. Typically, a military pension will be at least partially marital property, as with any other pension or retirement savings account.
Military rules do not determine how people divide a military pension but instead concern whether the government will send direct payments to a non-military spouse or the couple will need to make alternate arrangements for the distribution of the pension.
Those who are preparing for divorce after many years together and/or when they are relatively close to retirement age will need to carefully consider how to handle retirement accounts, pensions and similar benefits in their property settlement negotiations.
Carefully addressing the most valuable property that you own early is a viable strategy if you are worried about the outcome of a Pennsylvania divorce. Working with a legal professional to complete this task can be beneficial if you are concerned about protecting your interests.