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Austin Divorce Planners

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512-963-6883
512-963-6883
  • Home
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    • Financial Help
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You are here: Home / Blog / Overlooked Financial Issues During Divorce- Valuing a Pension

Overlooked Financial Issues During Divorce- Valuing a Pension

February 14, 2020 By Keith

Divorce is commonly seen as one of the most stressful experiences one will ever go through.  Along with all of that stress, you are also making financial decisions that will most likely affect the rest of your life and perhaps the lives of your children as well.  For that reason, it’s a good idea to get the advice of a Certified Divorce Financial Analyst™ or some other financial professional during your divorce process.

Valuing a Pension

While pensions are not that prevalent these days, they are still common for School Teachers and Government Employees.  Every participant who is enrolled in a pension gets a statement showing them what dollar amount they could access if they cashed in their pension.  This dollar value is NOT the value of the pension.  It’s simply their walk-away value.  A professional pension valuation would need to be done in order to calculate what the actual value, in today’s dollars, is.  To do this, we need a few bits of information.  The hire date, the marriage date, the separation date, and the last day of employment, if employment has been terminated.  That information will tell us how much, if any, is community property and how much, if any, is separate property.  We would also need to know when the employee is entitled to start receiving monthly payments and what would those monthly payments be and is there a cost of living adjustment.

Next, we would need to know what growth value we are going to use to calculate the present value.  In other words, we are calculating how much money one would need to have invested today, at the given growth percentage, to create a pool of money that would generate the same stream of payments at some point in the future.  The most commonly used return percentage would be the 20-year treasury.  The smaller that number then the larger the valuation will come out to be, but it is usually significantly more than the figure on the employee’s statement.  Failure to accurately calculate the true value of the pension can have a significant effect on the asset settlement.  It may be a good idea to have a financial professional involved in your divorce so that these issues are not overlooked.

Keith Powell, Certified Financial Planner® and Certified Divorce Financial Analyst​​™​
www.austindivorceplanners.com kpowell@austindivorceplanners.com 512-963-6883

Securities offered through SCF Securities, Inc. • Member FINRA/SIPC • 155 E. Shaw Ave., Suite 102, Fresno, CA 93710 • 800.955.2517 • 559.456.6109 FAX.  Investment advisory services offered through SCF Investment Advisors Inc. SCF Securities, Inc. and Austin Divorce Planners are independently owned and operated.  The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.  To determine what is appropriate for you, consult a qualified professional.

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Reviews

Christy Morley
Christy Morley
2022-06-12
Keith Powell was easy to talk to and he explained things for me to understand easily.
Melissa Girtman
Melissa Girtman
2021-08-04
I found Keith Powell through my divorce attorney and Keith was an amazing resource for me during my settlement negotiations. Keith's role as a Certified Divorce Financial Planner, helped me to evaluate the financial arrangements my husband's attorney was proposing; and feel confident I would be able to support myself and pursue my new divorced life. I am a very visual person and the plan Keith presented enabled me to see how my retirement goals were protected and my budget planning contributed to my success. Highly recommend Keith!
ATX_HEX
ATX_HEX
2021-01-14
I found Keith through Google and his reviews were good, so it made sense to go through a divorce financial planner as a mediator instead of my now ex-wife and I both paying to hire lawyers. Keith was knowledgeable and helpful for the most part, but there were many things I had researched about asset allocations in a divorce he had never even heard of. Additionally Keith and his assistant sometimes took days to return phone calls or texts. The biggest issue I had was the lack of communication and organization. What should have been handled in 2 meetings ended up taking three because Keith failed to tell both my ex-wife and myself all documents needed for our second meeting, so we were forced to attend a third meeting to reach an agreement with our finances and my assets at his going rate of $195/hr. An unnecessary expense had Keith just told us what we needed to bring in the first place for our second meeting.
Josh Tollett
Josh Tollett
2019-08-27
Divorce is even harder if you don't have a good adviser to help you through the process. Highly recommend to help you with your needs.
Kimberly Chapman
Kimberly Chapman
2014-11-13
To Whom it May Concern: I have personally known Keith Powell for the last three years. I can vouch for Keith's honesty and integrity having had the personal benefit of Keith's help within the context of my dissolution in February 2013. In addition I can also vouch for Keith's knowledge of the law, and expertise when it comes to his ability to provide the services for which he is so retained, and the fiduciary responsibilities that he assumes on behalf of his client. I know without a doubt I would not have faired as well in my dissolution without the aid and expert advice of Keith Powell who I now call my friend. Kindest regards, Kimberly Ann Chapman

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