Retirement and Its Effect on Alimony in New Jersey

If you have an obligation to pay alimony to your former spouse, the courts in New Jersey have the authority to adjust the payments in some circumstances. If circumstances change significantly after the initial settlement, the court can change the payment amount or stop payments altogether. A reduction in a paying spouse’s income due to unforeseen causes such as the loss of employment, may be used to justify an adjustment. Whether or not retirement warrants a decrease will be determined by your personal circumstances. A payor spouse who has reached good faith retirement age, usually considered your Social Security retirement age, is entitled to a court hearing to decide if the retirement has resulted in a change in circumstances such that a decrease, or outright termination, in alimony payments to the supported spouse would be warranted. The court will consider whether the retirement was reasonable under the circumstances of the case or whether it was solely motivated by a desire to minimize alimony payments. Any related factors can be considered by a judge, including:

  1. Age and health of both of the spouses
  2. Occupation of the retiring spouse
  3. Whether the retirement was optional or mandatory
  4. Weather the retirement happened before the alimony
  5. Impact of retirement on economic circumstances

When an individual retires before reaching their Social Security retirement age, the court will examine the circumstances more closely. A New Jersey court will weigh the interests of the retired spouse against the interests of the supported spouse, in addition to recognizing the retirement’s reasonableness and the retiring spouse’s motivation. A spouse who has good faith reasons for retiring early, such as a substantial financial motive, valid health conditions, or the high physical demands of the former profession, may not be required to continue paying alimony, particularly if the impact on the supported spouse will be minor. If the paying spouse is looking to avoid their financial responsibilities, alimony will likely not be terminated, especially if the supported spouse will be left with a significant shortfall in their ability to meet required expenses. The court will not prevent the paying spouse from retiring, but it will not absolve them of their obligation to pay either.

Before a divorce is finalized, the safest course of action is to discuss future retirement. A marital settlement arrangement will and should take into account the paying spouse’s likely retirement age to ensure that the supported spouse is not caught off guard by an unexpected reduction in income. Although planning events of future circumstances may be challenging, facing a court proceeding is oftentimes even more difficult. If the arrangement or alimony agreement did not account for retirement, the next logical step is to try to reach an agreement now, such as a gradual decrease in payments to give the supported partner time to adjust.

The court will likely not address any requests for a reduction in alimony until such time as the retirement actually takes place. Courts tend not to address situations until they have already happened. This can make retiring, especially prior to your Social Security retirement age, a risky decision.

If you have any concerns regarding your specific case or would like to discuss the ramifications or your possible retirement, please do not hesitate to contact our firm or (201) 701-1218 to go over the details of your matter.