While one should always seek to responsibly manage their finances throughout their entire life, at no point is prudent financial planning more critical than at the time of retirement. As a result of leaving the workforce one often loses a significant source of their income, and therefore one must think carefully about all their expenses and debts (e.g. mortgage, food, alimony, etc.) that they will continue to have after retirement, and ultimately decide whether they can actually afford to retire at a certain age. Therefore, the age of retirement is a natural time for an alimony obligor to seek termination or modification of their alimony obligation to their former spouse based on their changed financial circumstances, and in consideration of the factors set forth in New Jersey’s Alimony Statute, N.J.S.A. 2A:34-23(j).
Of course, an obligor is free to wait until the time they actually retire to petition the court to have their alimony terminated or modified, but this approach comes with one notable drawback. Indeed, if the obligor first retires and then seeks termination of their alimony obligation, they are taking the chance that the court will disagree with their position and decline to modify the alimony obligation. An outcome like this can place a heavy financial burden on the alimony obligor, as they must continue to make alimony payments notwithstanding their reduced income. Thankfully, this State’s Legislature provided an alternative approach to have one’s alimony obligation modified in consideration of their retirement. To avoid situations like the above, the New Jersey Alimony Statute actually permits alimony obligors to petition the court in advance of retirement to have their alimony obligation terminated or modified. The court can then make ruling as to what the alimony obligation will be at the future date of retirement based on the reasonably anticipated post-retirement circumstances of the parties. Accordingly, the alimony obligor will be able to know in advance of retirement whether they must continue with their alimony obligation, or whether the alimony obligation will be reduced or terminated. This can be extremely important information when it comes to retirement planning; the obligor will be able to whether they must be financially capable of affording continued alimony payments before actually leaving the workforce. As explained by the Honorable L.R. Jones, J.S.C., in the recent case of Mueller v. Mueller:
The amendment permitting a court to presently consider an obligor’s prospective retirement, as opposed to an actual retirement, is logically designed to avoid placing an obligor in a “Catch 22” financial situation. Specifically, if an obligor is considering the possibility of retirement in the near future, he or she logically benefits from knowing in advance, before making the decision to actually leave the workforce, whether the existing alimony obligation will or will not change following retirement. Otherwise, if the obligor first retires and unilaterally terminates his or her primary significant stream of income before knowing whether the alimony obligation will end or change (and if so to what degree, i.e., termination vs. modification), then the obligor may find him/herself in a precarious financial position following upon such voluntary departure from employment if the court, for whatever specific reason, does not terminate or significantly reduce the existing alimony obligation.
For this reason, when an obligor reasonably approaches retirement age, and files a motion setting forth a specific proposed plan for a prospective and projected retirement in the near future, a court may now address and consider the merits of same under the amended alimony statute, and render a prospective ruling regarding a proposed termination or modification of alimony, to take effect upon the obligor’s actual retirement in accordance with the proposed plan.
At the end of the day, alimony obligors should consider whether making use of the Alimony Statute’s prospective retirement provision is right for them. Having advanced knowledge of whether one will need to be able to afford alimony payments after leaving the workforce can be critical knowledge when it comes to planning for retiremen