Over the last decade, divorce among couples in their 50s is increasingly on the rise. This growing trend has come to be known as “Grey Divorce.” According to survey data from the U.S. Census Bureau, the divorces reported from the 55+ age range were twice the rate of every other age group. The most significant increase was among boomers age 65 and older with the divorce rate tripling between 1990 to 2021.
Since FERS participants can retire with an immediate annuity (pension) as young as 55 to 57, it’s important to understand how a Grey Divorce can threaten your retirement income.
How Your FERS Pension Is Divided
Your ex-spouse’s share of your FERS annuity (pension) is based on the number of years your federal career overlapped your marriage. It starts with calculating the total number of months between your marriage and your separation date. Then the annuity amount is divided by your total months of federal service.
“Once the amount is determined, your ex-spouse’s payment begins at the same time you start receiving your retirement annuity.”
Your Divorce Is Governed By Federal Law
Since your job is governed by provisions in federal law, standard state court divorce orders will not always be valid under FERS. If you get divorced while you’re still employed by the government, a Court Order Acceptable for Processing (COAP) is kept on file with the OPM until you retire.
Once the amount is determined, your ex-spouse’s payment begins at the same time you start receiving your retirement annuity. However, your former spouse may not be eligible for a FERS survivor benefit unless it was specifically negotiated in your divorce settlement.
How Your Thrift Savings Plan (TSP) Is Affected
Since the earnings you’ve contributed to your TSP during your marriage are considered marital property, an ex-spouse may be eligible to receive their share of your TSP through a distribution or a direct transfer to a qualified retirement plan. Unlike your FERS annuity, your ex doesn’t have to wait until you retire to receive their share of your TSP.
How FEHB Coverage Is Affected In Divorce
Though a spouse’s FEHB benefits end upon divorce, under the Civil Service Retirement Spouse Equity Act, an ex-spouse has 60 days from the date of the divorce to enroll in FEHB if they meet certain requirements. Click FEHB Fast Facts for more information.
Depending on how your attorney negotiates your divorce settlement, paying alimony and dividing other marital assets can also impact your retirement. Connect with an FRC® trained advisor who can put you in touch with an attorney experienced in handling divorce cases for federal employees.
Source: https://www.aarp.org/home-family/friends-family/info-2023/gray-divorce-trend.html
