The U.S. military offers one of the best retirement systems in the world. After 20 years of service, a service member can retire and receive 50% of their base pay for the rest of their lives, with cost-of-living increases thrown in just for fun. If you are (or were) married to one of the estimated 1.43 million men or women in uniform, then you have a claim on your spouse’s pension. However, this is a tricky subject, and you have some important decisions to make.
How Much Do You Get?
How much of that juicy military pension are you entitled to? That answer to that question will depend on a variety of factors. First, it will depend on where your divorce is filed. Different states have different laws regarding how assets are divided in a divorce. Since military families tend to move often, determining the correct jurisdiction might not be easy. You’ll need to divorce in a state where your spouse is a resident or “domiciled.” Another option is for you both to agree together on a state.
Next, the amount you receive will also depend on the length of your marriage and how many years your spouse was in the military during that marriage. The longer you were married while your spouse was in the military (and the farther along in his career he was), the greater your entitlement.
It’s a good idea to hire a divorce attorney with expertise in military divorces. Your lawyer can make the correct calculations or hire a professional actuary to make the calculations to help settle on a number. Once you have a martial share outlined, you’ll need to make an important decision.
Lump Sum or Wait and See?
If your spouse still has many years left before he plans to retire, it could be a long wait until you access your share of his military pension. For many reasons it might be a good idea to trade your share of the future pension for more assets now (like full equity in your home).
This is a calculated risk, but by taking a lump sum, you get a sure thing rather than possibly getting nothing. For instance, what happens if your ex-husband simply decides to leave the military before retirement and never qualifies for a pension? What if he is dishonorably discharged? What if he dies before he has a chance to retire?
The wait-and-see approach also means it could take a decade or more before you see the first penny of your ex-spouse’s pension benefit. Many women can’t afford to wait, especially military wives who often drop out of the workforce, because keeping a job is highly difficult when a family must pick up and move every few years.
It is always best to speak with an experienced divorce attorney before making big divorce decisions, such as whether to take a lump sum payment or wait ‘til your ex-husband retires. (You may also want to consider taking a lump sum payment instead of monthly alimony. Here’s why.) You can also get some great advice at your local Second Saturday Divorce workshop.