Your pension is a marital asset. Understand it.

Military retired pay is often the largest marital asset, but its value depends on the division method chosen. A coverture fraction divides only the portion earned during the marriage, a fixed dollar award locks in a set amount regardless of future pay increases, and a present-value offset trades the pension for other assets today. Each method can produce dramatically different lifetime payouts, and the wrong choice can cost a spouse hundreds of thousands of dollars over decades.

SBP provides up to 55% of the pension to a former spouse after the service member's death, but only if elected — and the election must be made within one year of the divorce decree. Without it, the ex-spouse receives nothing when the retiree dies, even if they receive monthly pension payments. SBP premiums reduce the retiree's pay by 6.5% of the covered amount, and the decision is extremely difficult to reverse, making it a critical settlement negotiation point.

Reserve and Guard pensions are calculated on a points system rather than years of service, and they are not paid until age 60 — meaning the marital fraction must be determined at divorce but the benefit may not be received for years or decades. Overlooked drill points, make-up points, and post-divorce service can all shift the coverture fraction. Because the pension is deferred, courts must decide whether to divide it now or reserve jurisdiction until payments begin, and this choice carries significant financial risk.

Only disposable retired pay is divisible, not gross retired pay — and the difference can be substantial. Allowable deductions include VA disability waivers, fines, forfeitures, and certain SBP premiums. If a service member later elects VA disability, the divisible pension shrinks, potentially reducing the former spouse's share. Understanding which deductions apply and structuring the court order to address future waivers is essential to protect the intended division.

Military retired pay receives annual cost-of-living adjustments (COLA) that compound over a 30- or 40-year retirement. A fixed dollar award does not increase with COLA, meaning inflation erodes its value each year, while a percentage-based division grows with the service member's pay. Understanding how COLA affects the chosen division method can be the difference between a fair settlement that keeps pace with inflation and one that loses half its value over time.

When DFAS makes direct payments to a former spouse under the 10/10 rule, the spouse is responsible for the taxes on their share — not the service member. If payments are made indirectly through the service member, the retiree bears the full tax burden and must rely on the spouse to cover their portion. This tax liability treatment must be explicitly addressed in the court order, as it affects the real value each party receives and can lead to disputes long after the divorce is final.