A pension and a 401(k) are two different ways to save for retirement. A pension gives you a set income amount distributed each and every month no matter how long you live. A 401(k) has a certain amount of money in the fund and when all of the money is eventually distributed that income stream is gone. Most people today no longer have the option of a pension and the comfort of a never-ending monthly income and must budget their retirement with 401(k) funds.  However, most teachers, police officers, and fire fighters can still rely on a pension for funding their retirement.

When you are getting a divorce, it is important to have your pension evaluated by an actuary.  An actuary is a math whiz that uses statistics to determine insurance risks and premiums.  An actuary can also use those math whiz skills to determine the marital value of your pension.  Most people with a pension receive a personal benefit statement which shows how much the employee has contributed to the pension.  This is not the value of the pension.  The value of the pension has to be calculated using a formula which will show the current value of that future stream of income.  Your future stream of income might be worth hundreds of thousands of dollars even though you have contributed $35,000 at this time.  If you retire at 60 and then live to be 100, that’s 40 years of pension money.  If you get $3,000/month from your pension then you get $1,440,000 from the pension.  But what if you live until 70?  Then you get a total of $360,000.  The actuary can help predict how long you will live and come up with an estimated current value of that future money (which also gets adjusted for inflation).  Sometimes some of the money for your retirement may be earned before or after your marriage.  That money does not count as a marital asset. It is not a straightforward calculation- which is why you need the skills of an actuary. 

A 401(k) and a pension are not always an even swap during a divorce.  It is important to have your pension evaluated so you can fully understand the value of the asset you are keeping or giving up. At Westfield Mediation, LLC, our divorce mediators help our clients understand this often-misunderstood situation. We help clients look at their entire financial situation as a whole and fully understand each piece of it.  We help both clients have a realistic view of their new financial futures and their retirement funds are a key piece of that picture. 

For more information on pensions or divorce mediation, please contact Randi M. Albert, JD, or Michelle Weinberg, M. Ed., Licensed Marriage and Family Therapist, at Westfield Mediation, LLC at 908.913.0373.  View our website at  www.westfieldnjmediation.com or email us at info@westfieldnjmediation.com. 
​

An important area to learn about, that many people overlook during a divorce, is how divorce may effect your Social Security benefits. Most people who are going through a divorce have so much to think about, that retiring is the last thing on their minds.  They think they will have to work forever.  At Westfield Mediation, LLC, we are able to take the long view and help people plan for their future, including their retirement. 

Here is some helpful information to consider, especially if you are close to age 62 when you get divorced.  When you are divorced, if your marriage lasted 10 years or longer you can receive benefits based on your ex-spouse’s work history record (even if he/she has remarried) if you meet the following criteria:

• you are 62 years old or above
• -you are unmarried at the time (never remarried or remarried but currently divorced/annulled/widowed)
• -your ex-spouse is entitled to Social Security
• -your ex-spouse’s benefit is higher than your own

The amount of benefits you get has no effect on monies your ex-spouse or his/her current or ex-spouse may receive.  So, even if your ex-spouse remarries and that marriage lasts for more than 10 years, two spouses (one current and one ex or two exes) benefit will be based off of the same person.  If you have been divorced for at least two years and you reach age 62, you can elect to start receiving Social Security benefits based on your ex-spouse’s record, even if your ex-spouse is eligible for benefits but has not yet elected to receive them.  You can start collecting even if your ex-spouse has not. 

There can be a lot of “government speak” about the rules, so it is always a good idea to talk to someone at Social Security or check out their website http://www.ssa.gov/retire2/yourdivspouse.htm to make sure you understand all the ins and outs of this benefit.  Sometimes it makes more financial sense to not start collecting Social Security at age 62, even though you are eligible.  The amount you receive may be higher when you have a later start date. 

During a divorce you have to plan for your future, a future different than you had previously imagined.  It is important that you take into consideration all the financial factors, including Social Security.  At Westfield Mediation, LLC, we can help you do just that.

For more information about Divorce Mediation contact Randi M. Albert, JD, or Michelle Weinberg, LMFT, at Westfield Mediation, LLC, at 908.913.0373.  View our website at www.westfieldnjmediation.com or email us at info@westfieldnjmediation.com

When a couple is getting divorced, they sometimes change their thinking from “what’s mine is yours” to “what’s mine is mine!”  During this process, a common misperception is that if an asset (pension, 401K, car, etc.) is in only one person’s name, then it is not considered a marital asset and actually belongs only to the title holder and will not be up for grabs during a divorce.   Surprise!!!  For the purposes of divorce, the name on the title does not matter.  Everything you and your spouse accumulate during the marriage is marital property and on the table for discussion for equitable distribution.  

Of course, there are some specific circumstances in which an asset that was acquired during the marriage still may not be considered a marital asset and truly, entirely belongs to just one of the parties.  These assets would not be eligible for equitable distribution.  For example, an inheritance received by one party that was never comingled with marital monies or a settlement from an accident for your pain and suffering that was kept in a separate account. 

Generally, however, since New Jersey is an equitable distribution state- assets are divided fairly, but not every asset has to be divided 50-50.  It is possible for one party to get 100% of one asset and 0% of another.  New Jersey law directs the Court to consider fifteen factors in determining what is an equitable, fair and just division of assets. They are:

- The length of the marriage
- The age and health (mental and physical) of the parties
- The income or property brought to the marriage by each party
- The standard of living established during the marriage
- Any written agreement made by the parties before or during the marriage regarding a property settlement  agreement
- The economic circumstances of each party at the time of the division of property
- The income and earning capacity of each party
- The contribution by each party to the education, training or earning power of the other
- The contribution of each party to the acquisition, preservation, appreciation or depreciation of the marital property, as well as the contribution of one party as a homemaker
- The tax consequences of the proposed distribution to each party
- The present value of the property
- The need of a parent who has physical custody of a child to own or occupy the marital residence
- The debts and liabilities of the parties
- The need for a trust fund to cover expenses for reasonably foreseeable medical or educational costs for a spouse or children
- Any other factors which the court may deem relevant 

So, in most cases, all assets acquired during the marriage are owned by both parties, and the plan for dividing them can be complicated.  To make this process easier, couples often rely on a professional divorce mediator to help them with the task.  Using a trained impartial mediator helps couples divide assets fairly without getting stuck on emotional feelings about who deserves more.