AD, reserve retirement pay considered marital property

Q: I am getting a divorce after 17 years of marriage. I served 27 years in the military.  I spent four years on active duty and 23 in the reserves.  The reserves use a point system and you don't collect retirement pay until you are age 60.  I had 10 years of service before my marriage which included four years of active duty where I earned most of my retirement points. Is my soon to be ex-spouse entitled to any of my retirement when I turn age 60?

-David, Elk Grove, Calif.

A:  As a reservist and a financial planner, I’m very familiar with the reserve retirement system of which you write…not that I’m counting my points.  When it comes to divorce, most things, including a portion of your military retirement, are up for grabs.  Make sure you enlist the services of an attorney that is experienced and knowledgeable in military divorce arena.

 Just to give you an idea of what might be fair and how the calculation might work, I’m going to assume you earned 100 points during each of your 23 years in the reserves and last year transferred to the retired reserves as an E-8 at age 45. Here are the numbers:

Total Points: 3,760

Points earned while married:  1,700

Percentage of retirement earned while married: 45%

Ex-spouse’s projected share of 2009 retirement value:  45% * ½= 22.5%

 

Using the Army Reserve Retirement Calculator, I calculate a total retirement benefit of about $1,325 in today’s dollars.  So, your ex-spouse would be entitled to $298 per month ($1,325 * 22.5%) when you turn age 60.  Notice, I did not use the age 60 values that include inflation adjustments to calculate your ex-spouse’s share.  In my mind, these inflation adjustments are earned by continued availability and service in the retired reserves.  In this scenario, if we assume 3% inflation, your pay at age 60 would actually be around $2,000/month…of which she would receive the roughly $300/month.

 

Obviously, this is relatively complex and you should, as I mentioned earlier, focus on getting a quality lawyer in your corner.  Thank you for your service and best of luck.