“A penny saved is a penny earned.”

— Benjamin Franklin

“A penny saved is a half penny earned.”

— Cynical divorcee

Savers are rarely rewarded by a divorce court judge.

In Ohio, “the division of marital property shall be equal” unless “an equal division of marital property would be inequitable,” in which case the judge must “divide it between the spouses in the manner the court determines equitable.”[1] In most cases, that means the parties will be dividing their marital assets 50-50, including retirement assets accrued during the marriage. That is why divorce court judges and lawyers are so adept at dividing by 2.

Most spouses going through a divorce accept—if not begrudgingly—the equal division of their retirement assets because the law (cited above) is relatively clear. However, if you set aside a sizable portion of your income in a retirement plan and you are required to pay temporary alimony (called “spousal support” in Ohio) or temporary child support, you will end up paying your spouse on both ends.

That is because most divorce court judges and magistrates determine temporary alimony and temporary child support based upon your gross income—not net. Temporary spousal support and child support are the support payments ordered to be paid while a divorce case in pending. That may be 12 to 18 months or longer in many cases. The division of the retirement account is typically based upon the value of the retirement account at the end of the case.

Let’s compare a spouse that earns $100,000 annual salary, pays $2,500 per month combined temporary spousal and child support during a 12-month divorce and sets aside a minimum 3% to get the match from his employer with a “saver” spouse that sets aside 15% (plus gets the 3% employer match).

Money Paid to Spouse During 12 Mo. Divorce
Minimum 3 % Match		“Saver” Spouse
Support Paid	$30,000	Support Paid	$30,000
Retirement Div.	$3,000	Retirement Div.	$9,000

Because the divorce court judge used gross income to determine the temporary spousal and child support, the support paid during the case is the same. But the “saver” spouse’s employer set aside an additional $12,000 for retirement during that same period of time, of which one-half ultimately went to the other spouse. That means the “saver” spouse had $12,000 less take-home pay during the year the divorce case was pending.

Let’s compare again, but this time looking at the payor spouse:

Take-Home Pay Payor Spouse
Minimum 3 % Match		“Saver” Spouse
Income	$100,000	Income	$100,000
Deductions	-$35,000	Deductions	-35,000
Support Paid	-$30,000	Support Paid	-$30,000
Retirement	-$3,000	Retirement	-$15,000
Take-Home Pay	$32,000	Take-Home Pay	$20,000

That extra $12,000 makes a significant difference to the payor spouse’s cash flow during the year the divorce was pending. Especially when you factor in additional costs during that same period of time, such as attorney’s fees, litigation expenses, and the costs associated with establishing separate residences.

So, what can a “saver” spouse do? It is not advisable for a “saver” spouse to unilaterally change their retirement withholding without explicit permission from the judge. That is because when a divorce is filed, the divorce court judge typically issues standard injunctions that prohibit spouses from doing certain things during a divorce, such as hiding assets. Those injunctions may prohibit a spouse from changing the amount of their retirement withholdings. And violating a divorce court judge’s explicit orders is never a good idea.

Your attorney could argue at the inception of the case for a smaller temporary spousal and child support amount based upon the amount you set aside each month for retirement. Your attorney should have detailed cash flow analysis (akin to the above comparisons) to show the judge. Because divorce court judges utilize gross income in most of their other cases to determine temporary spousal and child support, though, your attorney may be swimming a bit upstream. (In fact, temporary child support pursuant to the statutory child support worksheet must be set based upon gross income).

Another option would be for your attorney to argue at the end of the case that an equal division of property would not be equitable because of the amount of support paid during the divorce and to award you more of your retirement plan. That, however, would go against the presumptive 50-50 split and the divorce court’s typical “divide by 2” math. The factors in the Ohio Revised Code (R.C. 3105.171(F)) also do not explicitly provide for an unequal division based upon temporary support paid (though, there is a catch-all provision permitting a judge to consider “any other factor that is “relevant and equitable”). So, again, your attorney may be swimming a bit upstream.

Using the same forethought that compelled you to save in the first place, a “saver” spouse would best be served by some pre-divorce planning. As with any spouse facing a potential divorce, it is best to review projected income and expenses and review cash flow, taking into account added expenses for attorneys, litigation, and separate residences. If your projected cash flow is insufficient to cover projected expenses, review your withholdings to the extent permissible (but you should always take advantage of any employer match).

A “saver” spouse should always consult with an attorney prior to making any drastic changes to their retirement withholdings as some judges may view reducing one’s retirement withholdings as financial misconduct (even if it is done before a divorce case is filed), which may subject you to paying your spouse’s attorney’s fees, additional litigation costs, or may adversely affect your property award. An attorney can review your specific circumstances and cash flow and advise you about the local judge and court customs that may impact your course of action.

[1] R.C. 3105.171.

The "Saver" Spouse Problem