The issue of retirement often arises frequently when alimony issues arise. Oftentimes, alimony payors want to know, “What happens with my alimony payments if I retire” and “When will I be able to retire”? The analysis of these questions, in part, depends upon when the alimony order was entered.
On September 10, 2015, there was an amendment to the alimony statute: N.J.S.A. 2A: 34-23(j). The issue of retirement was specifically addressed in the statute.
For obligors who have an order for alimony dated after the effective date of the amendment to the alimony statute there is a rebuttable presumption that an individual’s retirement obligation will end upon attaining full retirement age. The statute defines full retirement age as the age when a person can collect full Social Security benefits. However, the obligor is to be cautioned because, the presumption that an individual can retire and terminate his/her alimony is a rebuttable presumption. That means that in determining if alimony should be terminated, a court is required to consider certain factors as specified in the alimony statute as follows:
- The litigants ages at the time of the motion for termination or modification of alimony;
- The litigants ages when they married and their ages when alimony was awarded;
- The amount and duration of economic reliance by the payee upon the other party during the marriage;
- Whether the litigant has exchanged something of value for a longer or shorter alimony award;
- The sum and period of alimony formerly paid;
- The litigant’s health when the retirement motion was made;
- The litigant’s assets at the time of retirement;
- Whether the payee has obtained full retirement age;
- All sources of income of both parties;
- The party who is collecting alimony capability to have saved adequately for retirement; and
- Any other relevant factor.
Alimony obligors who have an order that was entered prior to the effective date of the amended alimony statue must prove that their retirement was a “good faith” retirement. Just as it is pursuant to the amended alimony statute, attaining “full retirement age” or when a person can collect full Social Security benefits, supports a finding that the obligor is retiring in good faith. The Court will then go on to consider the below additional factors in order to determine whether the payor spouse has demonstrated that a change in the alimony obligation is warranted.
- The age and health of the parties at the time of the application;
- The obligor’s field of employment and the generally accepted age of retirement for those in that field;
- 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;
- 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;
- The reasonable expectations of the parties regarding retirement during the marriage or civil union and at the time of the divorce or dissolution;
- 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;
- The obligee’s level of financial independence and the financial impact of the obligor’s retirement upon the obligee; and
- Any other relevant factors affecting the obligor’s decision to retire and the parties’ respective financial positions.
Some obligors want to retire and terminate their alimony obligation before reaching full retirement age. If so, that obligor must demonstrate that their retirement is made in good faith and is reasonable. The above factors are again used in order to determine if the early retirement is in good faith and is reasonable.
In all circumstances, the law authorizes a court to consider an obligor’s application upon actual retirement as well as in the case of a prospective retirement which allows a payor spouse to know in advance whether the existing alimony obligation will or will not change prior to actually leaving employment.
In addition to the retirement analysis, it is important for obligors and obliges to remember that an obligor always has the right to make a motion to the Court to modify alimony if the obligor or the oblige has a change in circumstances.