This is the first in a series of articles on dividing military pensions. Want to stay updated on our latest articles? Subscribe and become a site member, it's free!
Is retirement pay divisible?
A really common question when military members divorce is "do we split the retirement pay?" Of course this is a hot button issues because even a small portion of retirement pay can end up being a lot money and a division of retirement pay typically ties two exes together until death-do-them-part, sort of the opposite of the point of a divorce. Spouses frequently are told by their military member that they "aren't entitled to retirement" or they "aren't getting any." And spouses frequently insist they are entitled to part of the retirement, that they earned it. So, what is the truth?
It is important to know that there is no Federal law that automatically entitles a former spouse to a portion of a member’s military retired pay. The most important federal law on military retirement pay is The Uniformed Services Former Spouses’ Protection Act (USFSPA). USFSPA accomplishes two things:
It authorizes (but does not require) state courts to divide "disposable retired pay" as a marital asset or as community property in a divorce proceeding.
It provides a mechanism for a former spouse to enforce a retired pay as property award by direct payments from the member’s retired pay (this is the 10/10 rule, more on this to come in a later article).
USFSPA means: For a spouse to get a portion of a military retirement, it MUST be awarded as part of a state court order (most likely your divorce decree/ division of your assets).
USFSPA authorizes (but does not require) state courts to divide military retired pay as a marital asset or as community property in a divorce proceeding.
I'm sure you're asking "so great what is going to happen in MY case?" Of course we can't tell you that, but we can tell is that all 50 states treat military pension as marital or community property. Just like any other asset accumulated during a marriage, it is subject to division at the time of the divorce or legal separation. If couple was married while one of them was on active duty then the percentage of a military retirement earned during the marriage is expected to be divided. This means in most cases the spouse will be considered to own a share of the retirement. This is true no matter how long you are married. Even if it a marriage of only a year or two, if that year or two overlaps with military service, then a correlating percentage of the retirement is a marital asset.
All 50 states treat military pension as marital or community property. In most cases, the civilian spouse WILL own a share.
One of the popular misconceptions about military retired pay is that it is only divisible if the marriage lasted at least 10 years. A state court can award a share of the military retired pay to a former spouse of military member even though the marriage lasted less than one year (To understand the 10/10 rule, read this article.).
What portion of Retirement Pay is Divisible?
Okay, so you now know that the retirement is divisible, but what part, how much of it? For this we have to look at the NDAA of 2017/2018. This law essentially divides military divorces into two categories, those that occur before military retirement and those that happen after. Which category you fall into will determine what portion of the retirement pay is divisible.
If your divorce occurs prior to the member’s retirement:
The divisible retirement pay is: "the amount of retired pay to which the member would have been entitled using the member's retired pay base and years of service on the date of the decree of divorce, dissolution, annulment, or legal separation" plus cost-of-living amounts granted to military retirees from the time of the (divorce) to the date the member retires minus authorized deductions.
Essentially this means an ex is not entitled to any increases in retirement that happen after the divorce is finalized (such as promotions or raises for time in grade), except cost of living adjustments.
If your divorce is finalized after the military member retires:
Then the whole retirement pay is divisible, less authorized deductions.
To learn about authorized deductions, read this article.
So, what's military retirement worth?
A standard military retirement can conservatively be worth hundreds of thousands of dollars (high ranking officers could be more). In a divorce, it is often the largest most valuable asset the spouses accumulate during a marriage.
The military offers its members a defined benefit pension, under which a member who serves at least 20 years will receive at retirement a monthly payment based upon the member’s years of service, basic pay, and a retirement multiplier. The multiplier has traditionally been 2.5% x years of service (so retiring at 20 years would result in 50% of the high-three basic pay), and that is still true for “legacy” retirement plans. However, for new members, as well as existing members who selected the blended retirement, the multiplier is now 2% x years of service, as there is also an enhanced Thrift Savings Plan available.
A High-3 Calculator can be found at: https://militarypay.defense.gov/Calculators/High-3-Calculator/.
A BRS Calculator can be found at: https://militarypay.defense.gov/Calculators/Blended-Retirement-System-Standalone-Calculator/
What Is a Defined-Benefit Plan? A defined-benefit plan is an employer-sponsored retirement plan where employee benefits are computed using a formula that considers several factors, such as length of employment and salary history.1 The company is responsible for managing the plan's investments and risk and will usually hire an outside investment manager to do this. Typically an employee cannot just withdraw funds as with a 401(k) plan. Rather they become eligible to take their benefit as a lifetime annuity or in some cases as a lump-sum at an age defined by the plan's rules.How much does the spouse get?
There is no formula that determines the division of retired pay (though there IS a formula on how to write it into your divorce decree, more on that later). State courts can divide retired pay in any way it chooses (subject to the law). Ultimately retirement pay is an issue to be negotiated. The spouse will likely be entitled to a percentage of the retirement that was earned during the marriage. There are many factors that could determine what percentage a civilian spouse gets. For example:
How long has the couple been married?
How many years has the marriage over lapped with the member's military career?
Did the civilian spouse have a career and how was that career impacted by the military member's service?
Examples:
Let's be as simple as possible: A couple was married for 20 years. The service member served 20 years. They got married the day the service member enlisted and got divorced the day the service member retired. The spouse was a stay at home mom with no career for the length of the marriage. In this case, it's possible that a fair distribution would be 50/50 division of the retirement.
Now let's take same situation, but now the wife worked and had a very successful career on par with the service member's. She was able to remote work and really didn't make any career sacrifices for her husband (hey, you can dream right?). She even has her own defined pension. Her civilian pension is ALSO a marital asset and the military member would be entitled to a portion of it. The couple could agree that he keeps his and she keeps hers. As long as they are roughly equal that would be fair and equitable.
From there it can get as complicated as you can imagine.
What if the military member never retires?
Welp, the the civilian spouse gets nothing. It's prudent remember that a share of retirement pay when a member doesn't retire is worth... nothing. A military retirement isn't a guarantee. The military member can separate any time they want regardless of what your divorce decree says. If they decide to get out, the civilian spouse is SOL. On the other hand, even if the military member wants to retire, it doesn't mean he/she will get promoted, avoid getting into trouble, not be force-shaped, get injured or sick and be subject to an MEB, etc. There are lots of reasons perfectly good servicemembers never get retirement pay. In fact, according to Military One Source, 81% of military members leave the military with no retirement!
81% of military members leave the military with no retirement.
As you are fighting over retirement pay, you need to really consider if the retirement is likely. There are some things that make retirement more likely, for example, if your service member has already hit sanctuary from high year of tenure. There are also some things that make retirement less likely, for example: a service member who separates simply to avoid giving their spouse a share of their retirement... think that's a joke? Nope. It happens.
Another factor for separating could also be that it is VERY VERY hard to be away from kids not just during deployments, but MOST of the year. Home isn't always home when there aren't kiddos. And the obvious solution is to separate from the military.
All of this to say, before you fight to high heaven for a share of retirement, you need to think about what that share will practically be worth (Your one year marriage? Not much.) and is it worth fighting about something that may never exist.
My spouse isn't going to retire for many years. Do I have to deal with retirement now? Can I just wait till later to ask for a share?
Not if you want a share. Once the divorce is final the court will consider this a final division of the assets unless it is clearly indicated and specifically that it isn't. This isn't advisable. Dividing at the time of divorce is best.
Have more questions? Reach out!
We are currently working on a series of articles on dividing military pensions. Want to stay updated on our latest articles? Subscribe and become a site member, it's free! We'll email you when new articles come out! You can also...
Comments