When a person paying support retires, the obligation of support does not automatically end. However, depending on the financial circumstances of the parties, a court may decide to terminate or reduce support based upon the good-faith retirement of the paying party. Major factors in deciding whether support should be modified are whether the retiring person’s ability to pay support has changed and whether the needs of the receiving party has changed. If by retiring, the paying party’s income significantly decreases, a reduction or termination of support may be appropriate. If the party receiving support is eligible to receive benefits, the court will examine whether those benefits replace the need for support.
In order to be eligible for a support modification, the retiring party must retire in good-faith. This means that the person retiring cannot do so for the purpose of avoiding his or her support obligation. A court may examine the circumstances of the retirement, including: age, whether the retirement was voluntary or involuntary, work histories, and the financial resources at the time of retirement. A court would probably find that the retirement of a 63-year-old vice-president of marketing was in good-faith, but would more carefully scrutinize the retirement of a 44-year-old computer programmer. A retirement must make sense under the circumstances.
The most important consideration is how the retirement affects the parties financially. If retirement does not create a significant change in the ability of the retiring party to pay, or if there is no change in need for the receiving party, the paying party may have to pay support out of his or her retirement benefits. If you or a previous spouse are in this situation or will be in the near future, you should discuss the impact of retirement with your attorney.