I Plan on Retiring Early, But I Pay Alimony – What Should I Do?
There is a second section to N.J.S.A. 2A: 34-23(j), New Jersey’s alimony statute, which addresses when someone may retire prior to reaching full retirement age. This section provides that when a obligor seeks to retire prior to reaching full retirement age that the obligor has to file an application with the Court and prove that his/her retirement is reasonable and in good faith. An obligor may seek to terminate his/her obligation, modify the obligation, or some combination of the two. An application can be filed with the Court both prior to and at the time of retirement (although I recommend filing prior to retirement, if possible, so that you can adequately prepare financially for retirement). There are 8 factors that the Court will consider in determining whether an obligor has met his/her burden to show that retirement is reasonable and in good faith. These factors are:
- The age and health of the parties at the time of the application;
- The obligor’s field of employment and the generally accepted age of retirement for those in that field;
- The age when the obligor becomes eligible for retirement at the obligor’s place of employment, including mandatory retirement dates or the dates upon which continued employment would no longer increase retirement benefits;
- The obligor’s motives in retiring, including any pressures to retire applied by the obligor’s employer or incentive plans offered by the obligor’s employer;
- The reasonable expectations of the parties regarding retirement during the marriage or civil union and at the time of the divorce or dissolution;
- The ability of the obligor to maintain support payments following retirement, including whether the obligor will continue to be employed part-time or work reduced hours;
- The obligee’s level of financial independence and the financial impact of the obligor’s retirement upon the obligee; and
- Any other relevant factors affecting the obligor’s decision to retire and the parties’ respective financial positions.
This section most often applies to certain professions – fire fighters, police officers, correctional officers, construction workers, and others who have a physically demanding job. Also, surgeons and other medical professionals may retire earlier or limit their work (and, as a result, their income) because their dexterity or eye sight may wane with age. Government employees are often included when they vest in the pension system.
The realities of many of these jobs are that due to their physical nature it is more difficult to perform these jobs once you are in your 50s and 60s. Also, some of the professions listed above protect public safety and health, such as police officers or correctional officers. The individuals who perform these jobs need to be in good health or it is a risk to the public. Another consideration is that certain professions, such as firefighters, have a shorter life expectancy than other professions. It may be unfair to require these individuals to work until full retirement age for all professions.
I recently represented at fire fighter (“Frank”) who intended to retire at age 52. Frank was a captain in the department and planned on retiring once he had enough years of service to receive his full pension. He explained to me how there were not many 50-something year old fire fighters because the job is physically demanding and it is difficult to perform when you are in your 50s. He tried his best, but he could not keep up with the 20- and 30-something year old guys – and Frank was in job shape! We were able to negotiate a settlement where Frank only had to pay alimony until his planned retirement age and he is able to retire at 52.
A client who is a New Jersey State Trooper (“Tom”) explained to me a few years ago when he retired that even though he did not really want to retire, he felt pressure to retire because he was holding up other troopers’ advancement in the force since they could not move up in the ranks until he retired. This culture helped us facilitate a reduction followed by an early termination of Tom’s alimony so that he could retire.
The culture of a job also plays a part when a correctional officer may retire. Another client who is a correctional officer (“Chris”) explained to me that he planned to retire around age 50 when he was fully vested in his pension. Chris explained that a vast majority of the correctional officers retired as soon as they vested in their pension because their jobs were dangerous and who really wants to spend 40+ hours per week in a prison with convicted criminals after 25 years? Chris made a good point and based on the culture of prisons and correctional officers in New Jersey, Chris will be able to retire around when he originally intended to retire.
In the last year I also represented a surgeon (“Sam”) in his divorce. Sam married young and was married for over 20 years, even though he was only in his early- to mid- 40s. Under the alimony statute there was a presumption that he would have to pay “open durational” alimony until full retirement age. Sam had concerns about his alimony obligation because he thought he would only be able to operate for another 15 years and his income would reduce significantly once he was no longer operating. We were able to negotiate a settlement for Sam at the time of the final divorce to address his current alimony obligation, as well as his alimony obligation when he could no longer operate. We were also able to negotiate a term for his alimony obligation and avoid “open durational” alimony, which means that Sam would not have to go back to court to address these issues.
One thing to keep in mind, though, is that when some individuals retire early, they get a second job. Depending on how much the obligor makes at the second job (or could make at a second job), how much their spouse makes, and the other factors in the alimony statute, some individuals still have to pay alimony after retirement, although the alimony amount is usually reduced. In order to determine if and how much of an alimony obligation that a client may have we need to review the obligor’s budget and income, as well as the ex-spouse’s budget and income, along with the other factors in the alimony statute to determine what is reasonable and fair in each circumstance.