Will my maintenance obligation reduce or terminate when I retire?
For many, the decision to retire is an easy decision that comes as a natural next step. For others, the decision to retire is difficult and filled with financial uncertainty and stress, especially when the decision is irrevocable. This is especially true if you have an ongoing maintenance obligation to your ex-spouse still lingering from your divorce. The paying spouse often has the same question when budgeting for their reduced income: Will my maintenance obligation reduce or terminate when I retire? This article discusses the effect of a spouse’s retirement on his or her spousal maintenance obligation.
Unless the maintenance obligation is contractual and non-modifiable, the paying spouse may be able to reduce their Court ordered maintenance obligation as a result of their reduced income. The paying spouse’s obligation may only be modified upon a “showing of changed circumstances so substantial and continuing as to make the original award of maintenance unfair.” Thus, in order for the Court to grant the paying spouse’s request to modify the maintenance amount, the payor has to show that circumstances have changed since the original maintenance amount was ordered, and those circumstances are so severe that payment of the original award of maintenance would now be unfair for payor to keep paying. Reduced monthly income resulting from the decision to retire may meet this standard, but retirement triggers other questions.
First, the Court will look to see if the retiring spouse has reach “retirement age.” C.R.S. §14-10-122(c) defines “full retirement age” as:
- “The payor’s usual or ordinary retirement age when the payor spouse would be eligible for full United States social security benefits, regardless of whether he or she is ineligible for social security benefits for some reason other than attaining full retirement age. “Full retirement age” shall not mean “early retirement age” if early retirement is available to the payor spouse, nor shall it mean “maximum benefit retirement age” if additional benefits are available as a result of delayed retirement.”
Therefore, official retirement age is whatever the age the Social Security Administration deems as the normal age for full benefits. Currently, for people born in 1960 or later, that is 67 years old. It’s important to note that a decision to retire before 67 could still be deemed in good faith and at full retirement age after going through the next step below.
Second, the paying spouse (also the retiring spouse) has to show that the retirement was in good faith. C.R.S. §14-10-122(b). Colorado Courts have determined that “good faith” means the decision to retire was not affected by the ulterior motive of voluntarily unemployment or underemployment, as a means to reduce or eliminate a maintenance obligation. In re Marriage of Swing, 194 P. 3d 501 (Colo. App. 2008). Thus, the paying spouse must show they are not voluntarily unemployed or underemployed with their decision to retire.
A party shall not be deemed voluntarily underemployed or unemployed if the decision to retire is (1) a good faith career choice; and (2) was objectively reasonable based on factors such as the retiring spouse’s age, health, and practice of the industry in which the spouse was employed. In re Marriage of Thorstad, 2019 COA 13, ¶ 7, 434 P.3d 165, 169, reh’g denied (Feb. 14, 2019). In other words, the Court is going to look at all circumstances surrounding the payor’s decision to retire, such as employer forced retirement, whether the health of the retirement party has triggered the need for retirement, and how close the retiring party is to full retirement age before determining whether or not the circumstances warrant a modification.
Finally, the paying spouse must know their presumption of good faith retirement is “rebuttable” by the other party. Because the decision to retire impacts future maintenance, the court must give the spouse receiving maintenance the opportunity to refute or disprove the presumption that retirement was made in good faith. This is why it is important to speak with a qualified attorney prior to retiring with an ongoing maintenance obligation.