In a divorce case, a higher income earning spouse may be “on the hook” to pay maintenance (alimony) and child support. There are divorces, however, in which this higher income earning spouse is in his or her sixties and nearing retirement age. Some dads have children when they are in their fifties, or later. In other cases, a divorcing couple, after a longer term marriage, splits up after their children are adults, thereby leaving spousal maintenance as the sole support issue to be determined. The question arises in these cases as to whether that higher income earning spouse is going to be able to retire when reaching retirement age or whether the law requires that spouse to keep the income rolling in regardless of that his or her age. Prior to changes in statute, there was already case law supporting the notion that there was a valid correlation between retirement and modifying support obligations. Statute now codifies such notions.
The Colorado Legislature has addressed this issue in C.R.S. 14-10-122, which states:
“…(b) A payor spouse whose income is reduced or terminated due to his or her retirement after reaching full retirement age is entitled to a rebuttable presumption that the retirement is in good faith.(c) For purposes of this subsection (2), “full retirement age” means the payor’s usual or ordinary retirement age when he or she 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.”
“Ordinary retirement age” in this statute is generally going to be age 65. In a typical case, when calculating spousal or child support, a party who quits their job for no good faith reason is considered voluntarily unemployed and the income abandoned by that spouse is still imputed to them as if it is still being earned. However, C.R.S. 14-10-122 creates an exception recognizing that quitting employment at the age of 65 will be presumed to be in good faith, and thus preventing income imputation.
Regardless of the potential statutory pass a spouse might get at retirement, statute does not provide relief when a retirement age spouse keeps working. Turning 65 is not a “magic” age at which the court ignores that a spouse is actually continuing to earn the same income. In other words, the higher income earning spouse has to actually retire. Furthermore, the statute creates a “rebuttable presumption” that retirement at the age of 65 is in good faith. This means that the other spouse still has room to argue against allowing the first spouse to reduce his or her income, despite them reaching retirement age. One could envision a situation where a higher income earning spouse has an easily attainable bonus or stock maturity if employment continues past the age of 65, but the higher income earning spouse abandons those incentives just to avoid sharing those easily attainable incentives with an ex-spouse via a support order. Thus, just reaching retirement age is not an absolute basis to justify reducing income and support.
Additionally, in some cases, the lower income earning spouse may have their own respectably compensated career, but is still entitled to support under the applicable statutes. In such cases, the higher income earning spouse may think, “If I retire, my spouse will earn more money than me, and I will get support!” In the opinion of this author, the law does not permit this. If the higher income earning spouse is retiring without experiencing a disability or being forced out of his/her job, the court can take those circumstances into account and not require the younger spouse to essentially fund the older spouse’s retirement. Further, the court can look to the assets/retirement resources of the retiring spouse to determine the appropriate support orders. Draws from retirement accounts or pensions count as income under the support statutes, so to the extent a spouse replaces wage income with retirement draws and social security payments, the higher income earning spouse may not be reducing his/her income by enough of an amount to change the support calculus.
It should be noted that retirement as a divorce related subject does not just tie into modifications of alimony or child support. Rather, retirement as relates to income and assets can also become a divorce issue while the initial case is pending. If retirement is an issue arising in your divorce case, I advise speaking to an experienced family law attorney to understand your rights and options, regardless of which side of the equation you are on.