Domestic Relations Order

(or QDRO - Qualified Domestic Relations Order)

It's a court order protecting an ex-spouses (called the "alternate payee") right to a retirement benefit. It can be a bargaining chip in divorce negotiations, but please....

So many people sign off on the pension benefit -- they worry about TODAY, with no care for TOMORROW. BUT if you are close to retirement, even ten years away -- LOOK and UNDERSTAND the benefit you are forfeiting before you sign on the dotted line.

It's usually a lifetime pension, or a lump sum from the pension plan... don't simply walk away from that. Your retirement years will come quicker than you think, time flies, and suddenly you are there -- do you have a Domestic Relations Order pension benefit or not?

Don't let an attorney make that decision for you. They get paid for every time you can't make a decision, every new argument, every time the case is postponed -- and they may or may not be looking at your best long-term interests.

Do your own homework - this is a major life-changing decision!

Learn more about Divorces, in your specific state -- read the State Divorce Law Summary and their frequently asked questions too!

There are few defined benefit pensions left today... but if you have one, or are divorcing a spouse who has one, look at the long-term value of that pension. It's a lifetime pension... regardless of the stock market, your health, or other factors -- a defined benefit pension plan guarantees a lifetime income. LIFETIME!

Even if you only get 50% of a 10 year pension, it can make your life easier down the road... and you deserve it, you were married and that pension is part of the marital assets you "own".

For example (all pensions are calculated differently... you need to look at the specific plan you are under, this is only an example):

1.5% multiplier x 10 yrs of service x $30,000 income = $4,500/year for life.

50% of $4500/year = $2250/year.

$2250 divided by 12 months = $187.50 per month for life.

That's a small pension, right? No biggie... let's get a bit more from something else in the divorce, instead, and sign off on the pension itself. -- Not so fast!

$2250 / year at age 60 x 25 years (age 60-85) = $56,650 over 25 years.

Now you could live only 10 years after you begin to draw the pension, but you also might live to age 95!

Is the offer of "something else" worth more than a lifetime $187.50 per month? That depends on what you get... and that's the reason I'm asking you to think twice before you just forfeit a lifetime pension.

Just THINK -- that's all I ask before you sign on the dotted line....

Do your homework so you know you've done it right, for yourself!

New! Comments