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You can buy your ex out of your pension

If you get divorced, your ex likely has a claim to at least a portion of your pension.

Typically, the amount owed to each person is half of the pension for the time the two were married. So, if you were married for the entire 40 years you worked at the company, your spouse has a claim to half. If you were only married for 20 years out of 40, your spouse has a claim to half of that half, or 25 percent of the total.

Granted, every case is different, but this is often how a pension is divided.

However, there's one other option. You could buy your spouse out of the pension during the divorce. Then you don't have to stay connected for years by this financial link. You can just go your separate ways.

What you do is to get a valuation of the entire pension that you're expected to get. This can be tricky, since the pension pays out until you pass away, but it can be done.

Once you have the value, you can then give your spouse other assets to make up that value.

For example, perhaps the pension is worth a total of $500,000. You also own a home that is worth $500,000 in the current market. You deserve $250,000 out of the house and your ex deserves $250,000 out of the pension. Rather than splitting them both, you could just say your ex gets the entire house, you get the whole pension, and you can then use those payments to buy a new home of your own.

It's very important to fully understand your options when considering your retirement benefits, as they define your financial position when you leave the workforce.

Source: US News, "How Divorce Affects Retirement Benefits," Emily Brandon, accessed Dec. 15, 2017

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