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How do you secure a share of a pension as a non-working spouse?

On Behalf of | Mar 4, 2020 | Divorce

Choosing to stay at home as a spouse or a parent can be very rewarding. You can manage all of the affairs for the household or care for your children and watch them meet important milestones. However, staying out of the workforce means becoming completely reliant on your spouse for financial support both now and later in life when you reach retirement age.

If divorce is likely part of your future, it’s only natural to worry about how it will affect your golden years. You shouldn’t have to worry about working a minimum-wage job because you haven’t accrued a pension on your own. In many cases, you may have a right to share in the pension your spouse earned while you stayed home, which the courts may allocate to you via a Qualified Domestic Relations Order (QDRO).

Unpaid labor benefits the marital estate

One of the reasons your spouse could achieve professional success is that they could rely on you handling the household and family on their behalf. They could therefore focus their efforts entirely on their work instead of needing to split their mental energy and time between their job and the practical concerns of their home life.

Not only did your unpaid work allow your spouse to focus more on their job, but the same labor also helps the household avoid expenses. The unpaid work you did via the cooking, cleaning or childcare could cost hundreds or thousands of dollars each week if outsourced to a professional. The money that didn’t get spent on hiring someone for those services benefited the household, including your spouse.

Dividing a pension is usually part of equitable distribution

In New York, the family courts apply the equitable distribution standard when it comes to dividing up assets and debts acquired during the marriage. Although you may not have had any direct financial contributions to the pension itself, you likely have a partial ownership interest in the balance accrued during your marriage.

A QDRO is part of the divorce decree that instructs a retirement plan administrator to split part of the balance into a new account in your name. Given that it takes place due to a court order and as a part of the divorce, a QDRO helps you avoid fees and penalties associated with early withdrawal from pension funds or retirement accounts. Asking for a fair share of the pension via a QDRO should likely be part of the divorce strategy for the non-working spouse of a pensioned professional.