Retirement And Affect on Alimony

The firm is often called on at times to advise clients on the effect of retirement on a payor’s obligation to pay alimony to a former spouse. Retirement can be viewed as “normal” retirement at the age of 66 to 67 when Social Security Retirement age kicks in or prior which is called “early retirement.” Despite some individual’s belief, retirement does not give rise to an automatic cessation of alimony.

As a general rule, the provisions addressing alimony in a marital settlement agreement may be modified upon a showing of “changed circumstances” unless there is a non-modification provision.

Retirement is a changed circumstances which may or may not be deserving of a modification or termination of alimony. However, many include provisions as it relates to retirement in Martial Settlement Agreements that plan for this future occurrence. For example, some clients insert language that it is expected that the payor will retire at the age of 66 and that alimony will be terminated at that time. Other provisions might not be so cut and dry and state that “at the normal retirement age, payor may seek to modify and/or terminate alimony.”

Alimony is to maintain the dependent spouse at the standard of living he/she had become accustomed to during the marriage. By law, alimony automatically terminates at the death of the payor, the death of the payee or the remarriage of the supported spouse. It will also terminate upon reaching the number of years specified in the Court Order or Agreement in the case of limited duration alimony or rehabilitative alimony.

With the amendments to N.J.S.A. 2A:34-24 in 2014, the statute now gives guidance to how and when a party may seek modification or termination of his or her support obligation upon actual, early or prospective retirement. The new retirement sections are N.J.S.A. 2A:34-23(j)(1), which covers termination of an alimony obligation established in an order entered after September 10, 2014; N.J.S.A. 2A:34-23(j)(2), which covers termination of alimony based upon early retirement; and N.J.S.A. 2A:34-23(j)(3), which covers termination of an alimony obligation established in an order entered before September 10, 2014.

The law distinguishes applications for modification or termination of alimony obligations established before and after September 10, 2014. For obligations that were in effect prior to the amendments, the paying spouse’s attainment of full retirement age shall be deemed a good faith retirement age. At that point, a court weighs that age attainment against a series of statutory factors to determine whether alimony should be modified, terminated or left intact. Additional factors are considered to determine whether the paying spouse has demonstrated that a change in the alimony obligation is warranted:

(a)The age and health of the parties at the time of the application;
(b)The obligor’s field of employment and the generally accepted age of retirement for those in that field;
(c)The age when the obligor becomes eligible for retirement at the obligor’s place of employment, including mandatory retirement dates or the dates upon which continued employment would no longer increase retirement benefits;
(d)The obligor’s motives in retiring, including any pressures to retire applied by the obligor’s employer or incentive plans offered by the obligor’s employer;
(e)The reasonable expectations of the parties regarding retirement during the marriage or civil union and at the time of the divorce or dissolution;
(f)The ability of the obligor to maintain support payments following retirement, including whether the obligor will continue to be employed part-time or work reduced hours;
(g)The obligee’s level of financial independence and the financial impact of the obligor’s retirement upon the obligee; and
(h)Any other relevant factors affecting the parties’ respective financial positions.

While the same statutory factors are used to determine any application based on retirement, the burdens of proof on the respective parties is different depending on whether the alimony obligation was established pre- or post-September 10, 2014. For pre-amendment obligations, reaching full retirement is deemed a good faith retirement age with the burden of proof remaining with the paying spouse to demonstrate why alimony should terminate. For obligations established after September 10, 2014, however, there is a rebuttable presumption that the obligation shall terminate upon the paying spouse’s attainment of full retirement age, with the burden of proof shifting to the recipient to demonstrate why alimony should not terminate or be reduced.

The amended statute also permits a paying spouse to seek modification or termination when he or she seeks to retire earlier than full retirement age, if he or she can demonstrate by a preponderance of the evidence that the prospective or actual retirement is reasonable and made in good faith.

In all circumstances, the law authorizes a court to consider a paying spouse’s application not only upon actual retirement, but on “prospective retirement” as well.

Absent a specific provision in an agreement which clearly delineated and allows for termination of alimony at a specifc point in time, the matter will be analyzed by Judge based on the above new parameters.   Gourvitz & Gourvitz, LLC has vast experience in this arena and can assist you when the time comes.