What Happens to Alimony When the Payor Retires

By: Michelle L. Searcy

Often, the longer the marriage, the longer the duration of the obligation to pay maintenance (alimony). As a result, one party in a divorce may still have many years of support to pay, even as he or she approaches retirement age. Unless that maintenance obligation is contractual and non-modifiable, the person owing a duty of support may have a basis to seek modification of the term and amount of maintenance. Since contractual, non-modifiable maintenance requires the parties to agree to that aspect of maintenance, any orders that do not clearly state this condition are modifiable.

Modifying maintenance places a heavy burden on the party seeking to modify to prove that a substantial and continuing change of circumstances has made the previous order unfair. If you have reached full retirement age and are, in fact, retiring in a manner where your retirement income will not be sufficient to pay maintenance and your living expenses, your chances of modifying or terminating maintenance are good. If you are retirement age, but still continuing to work full-time, you may find it more difficult to change maintenance.

Some professions allow for early retirement. In Colorado, as relates to retirement, a person owing a maintenance obligation shall not be considered underemployed if: (1) the decision was made in good faith without a motivation to decrease or eliminate maintenance, and (2) the decision was objectively reasonable based on the particular circumstances of the party seeking to change the obligation. These factors include, the person’s age, health and the usual practice in the industry of the obligor. This standard was established in the 2008 Colorado Court of Appeals case, In re Marriage of Swing, 194 P.3d 498. The standard also applies to a recipient of maintenance who takes an early retirement and seeks to increase maintenance. Swing established that modification cannot be denied solely on the basis that the otherwise objectively reasonable decision disadvantages the person receiving maintenance.

If your retirement plan includes drawing from a retirement account that was divided as part of the divorce, you will be able to argue that your former spouse will have his or her share to make up the difference in support. However, if your former spouse is not at least 59 and a half years old, any withdrawals from a retirement account will incur a penalty. Plus, a party who receives alimony cannot be expected to expend their marital property for financial support.

If the duration of your marriage was at least ten years, your former spouse may be able to collect social security income based on your earning record. Therefore, a spouse who earned far less or spent years taking care of the home and family has the opportunity to collect 50% of your social security without reducing the benefit you collect. However, your former spouse must be 62 years of age to do so and may collect on your earning record even if you have not yet applied for social security benefits. Furthermore, your former spouse cannot collect on your earnings record if he or she worked for local or state government in a position where, instead of contributing to social security, he or she had a retirement pension through said government employment.

In all, Colorado does respect your reasonable retirement plans and may well modify maintenance on this basis. However, if you are retiring or retired, but still have a minor child to care for, you should expect to continue paying child support, although the court may modify it on the basis of your change in income. If you are trying to retire early, an obligation to support a minor child could impact the court’s analysis of whether your retirement decision is objectively reasonable. A minor child could receive a benefit on the basis of the child’s parent’s or step-parent’s death or disability, but not based on a parent’s retirement. Hopefully, this blog post provides an outline of considerations if you are thinking of retiring but still have a maintenance obligation. I highly encourage all readers to consult with a divorce attorney prior to making significant decisions related to alimony and retirement.