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 firstname.lastname@example.org.