Retirement And Alimony – By: John P. Paone, Jr., Esq. and Megan S. Murray, Esq.

Many people dream of the day when they can leave the workforce and retire. In most cases, significant planning and analysis must be undertaken well in advance of retirement to ensure financial security after income from employment terminates. For parties going through a divorce or who have support obligations as the result of their divorce, the decision as to whether to retire becomes even more complicated.

When one spouse is the primary wage earner during the marriage and is relied upon by his or her spouse for financial support, that spouse may be obligated to pay alimony to the dependent spouse in the event of divorce. Once an alimony obligation exists, the payor loses some control over when he or she can retire. In the case of an intact marriage, the parties may have a plan for early retirement—establishing a nest egg of assets to allow for retirement at an early age. If those parties go through a divorce, and an alimony obligation is established, the payor spouse will be unable to simply elect to retire at an early age, regardless of any plans made regarding early retirement during the marriage.

A party cannot be forced to continue to work. However, an alimony obligor can be required to continue alimony payments, regardless of whether he or she remains employed. Indeed, if the court finds that retirement is not appropriate based on the circumstances of that case, the court has the right to impute income to the payor spouse based on his or her prior earnings even if that spouse has retired. In making this determination, the court will consider many factors, including but not limited to, the financial circumstances of both parties at the time of the prospective retirement; the age and health of the party seeking to retire; the degree of financial dependency of the recipient spouse upon the alimony payor; and the ability of the recipient to have saved adequately for retirement.

In New Jersey, a presumption exists that alimony shall terminate upon the retirement of the obligor spouse if that spouse has reached full retirement age, as defined by the federal Social Security Act. This will generally be between the ages of 65 and 67, depending on the birthday of the payor spouse.

If you are considering divorce or currently paying alimony and have questions regarding your prospective retirement, you should contact an attorney to discuss your options and the best path for you to reach your retirement goals.