The retirement of a person paying does not automatically end the payment of support. However, depending on the financial circumstances of the parties, a Court may stop or reduce support based upon the good-faith retirement of the paying party. One big question as to whether support should be modified is whether the ability to pay support by the paying party, or the needs of the receiving party, has changed following retirement. If by retiring, the paying party’s income significantly decreases, a reduction or possibly stopping support is appropriate. If the party receiving support is also eligible to receive benefits, the Court will examine whether those benefits replace the need for support. However, in order to be eligible to modify support, the retiring party must retire in “good faith”. The purpose of the retirement cannot be to avoid the 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. For example, 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 and not be for the primary purpose of avoiding payment of support.
Still, the most important part of this analysis is how does the retirement affect both parties financially. If retirement does not create a significant change in the ability of the paying party to pay or there is no showing of a change in needs for the receiving party, the paying party may have to pay support out of the retirement benefits received. If you are in this situation (or your ex-spouse is) or will be in the near future, you should discuss the impact of the retirement or planned retirement with your attorney.
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