Retiring Early Following A Divorce
The question of retirement often comes up following a divorce. After paying alimony for a certain period of time, clients often ask if they are permitted to retire and to reduce their alimony obligation. The answer is not always clear cut and is dependent on numerous factors.
Retirement does not always leads to an automatic termination of one’s alimony obligation. Pursuant to the new legislation enacted by New Jersey’s lawmakers in September 2014, the following factors must be analyzed in order to determine whether a modification of alimony is warranted upon one’s retirement:
(a)The age and health of the parties at the time of 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 retirement by the obligor upon the oblige; and
(h)Any other relevant factors affecting the parties’ respective financial positions.
In examining your desire to retire, a court will likely focus on whether your potential retirement is in good faith, rather than merely a desire to terminate your alimony obligation. If you are seeking to retire before the age of 65, the court will focus very closely on the reasons for your early retirement. Are you employed in a profession where early retirement is the standard? Have you been injured such that you cannot return to work? The court will also focus on your financial situation once you retire. Will you be able to maintain your alimony obligation and also your expenses? Will you be able to work in another capacity so that your income stream remains unaffected?
All of these questions must be analyzed prior to making the decision to retire early. Do not assume that retirement will guarantee a termination of your alimony obligation. If you are seeking to retire and modify your obligation, be sure to consult with an attorney to understand your rights and obligations. [Posted by Jenny Birz, Esq.]