Tag Archive for: pensions

by Michael F. Callahan

The Maryland Court of Appeals has issued its ruling in Milton E. Jackson v Gayle S. Jackson., the case we have been discussing in this last series of articles.

Mr. Jackson was a federal employee with retirement funds under the CSRS system – a large pension, and no social security.  Ms. Jackson was a state government employee – covered by social security and a smaller pension.

Mr. Jackson’s argued that a part of his pension should be treated as social security benefits and not counted when equalizing the pensions of each party.

The Court of Appeals ruled that:

(a)  a state court could not divide social security benefits of a spouse in divorce because federal law establishing social security preempts that.

(b)  The trial court may not calculate and offset the value of a spouse’s future social security benefits from the other spouse’s pension benefits before division of that pension between the spouses in a divorce.

(c)  However, the trial court must consider the spouses’ respective entitlements to social security benefits in determining a martial award as an “other factor” under Maryland divorce law.

So in the end, the Court left a way around the prohibition against dividing or offsetting social security benefits.  It left it to the judge’s discretion to determine a marital award based on “other factors” including social security.  And the judge doesn’t even have to show how the marital award is calculated.   The judge just needs to say that all factors were considered.

 

 

As the baby boomer population reaches retirement age, divorces are doubling.  Call it a second midlife crisis.  Whatever the cause, it can throw a monkey wrench into the best laid retirement plans.  Divorce is not a planned financial event.

The pension plan that was going to fund vacations and travel for two people may be split in half in a divorce.  Now it must pay for two vacations, two dwellings, two cars and so forth.  It may cost as much as 50% more for two people to live separately as it does to live together as a couple.  Also, if one person gets sick, they may have to hire a caregiver.

None of the solutions are attractive.  You can delay retirement, save more or reduce your life style.  If you divorce in your 20s or 30s, you have time to recover your losses.  It is not as easy if you divorce at 60 or 65.