Approaching the so-called Golden Years, many couples dream of the prospect of taking early retirement without drastic reductions in the benefits. Many pension plans offer early retirement incentives to eliminate older workers who have peaked and replace them with younger, less expensive employees. Care must be taken, however, if the early retirement subsidies and supplements become an issue in a divorce.<\/p>\n
The alternate payee (or nonparticipant), and the participant, who is the worker, may be counting on the early retirement subsidies. However, many nonparticipants mistakenly believe they have a right to the enhanced benefits even if the participant\u00a0stays on the job. The worker who stays on the job can walk away when he or she retires at a normal age (usually 65) while the spouse\u00a0who took reduced benefits early struggles with a much smaller share of the pie. Some actuaries warn that the alternate payee should not retire before the participant\u00a0\u201cfor fear of losing a larger share of the ultimate pension\u201d \u2013 the one that lasts a lifetime.<\/p>\n
Some plans permit payments to the alternate payee on or after the participant\u2019s earliest possible retirement, even when the participant has not retired, but the alternate payee runs a risk if he or she retires before the participant. The alternate payee\u2019s retirement before the participant\u00a0\u201ccan sometimes lead to the ultimate loss of all early retirement benefit.\u201d<\/p>\n
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Approaching the so-called Golden Years, many couples dream of the prospect of taking early retirement without drastic reductions in the benefits. Many pension plans offer early retirement incentives to eliminate older workers who have peaked and replace them with younger, … Continue reading