Understanding the Impact of Retirement on Spousal Maintenance

A common misconception about spousal maintenance is that it automatically ends when the obligor—the person paying spousal maintenance—retires from employment. But that is not necessarily the case. Unless the divorce decree includes a specific provision addressing termination of spousal maintenance upon the obligor’s retirement, most spousal maintenance awards only terminate automatically in two circumstances: (1) upon the death of either party; or (2) upon the spousal maintenance recipient’s remarriage. In all other situations, the obligor must take affirmative steps to alter a spousal maintenance obligation. 

Minnesota law allows for spousal maintenance to be modified upon the obligor’s retirement. “Modification” may mean an outright termination of the spousal maintenance obligation, but it also refers to changes to the spousal maintenance obligation, including:

• a reduction in the amount of spousal maintenance;

• a temporary suspension or “pause” of the obligation; or

• a reservation of the issue, leaving the door open for the court to award future spousal maintenance if circumstances change.

  
  

If retirement is on the horizon for a spousal maintenance obligor, below are some key takeaways under Minnesota  law.

Can the obligor retire early to stop paying spousal maintenance?

When analyzing a motion to modify spousal maintenance brought by a soon-to-be retiree, the court must consider whether the obligor is retiring in good faith or is unjustifiably self-limiting their income to stop paying spousal maintenance. Generally, this factor is satisfied if an obligor retires at full retirement age for Social Security purposes (e.g., age 67 for anyone born in 1960 or later) or retires at an age that is customary in their specific occupation (e.g., a commercial airline pilot has a mandatory retirement age). In other words, an obligor who retires at full retirement age cannot be presumed to be retiring in bad faith.

When can an obligor bring a modification motion?

An obligor does not need to wait until they retire to bring a motion to modify their spousal maintenance obligation. Minnesota law allows the obligor to file a motion before actual retirement if the obligor can provide their specific date of retirement. The court can then make any change to the spousal maintenance obligation effective as of the actual date of retirement. Keep in mind that the obligor is still required to pay spousal maintenance in the court-ordered amount until the parties reach a post-divorce settlement or the court grants a motion for modification of spousal maintenance.

What other factors will the court consider?

As is the case with an initial spousal maintenance award, the court will consider the financial resources available to both parties and then balance the spousal maintenance recipient’s need for financial support against the obligor’s ability to continue paying support. Such financial resources may include, but are not necessarily limited to, Social Security benefits , pension income, and the parties’ assets, including investment and retirement accounts.

Finally, the court will consider whether the parties have reasonably and prudently managed their assets since the divorce. For example, if a spousal maintenance recipient was reckless with their spending post-divorce and spent down their retirement savings, the court might impute income to them when analyzing their need for spousal maintenance.

Conclusion

Spousal maintenance modification motions are fact-specific and depend on both parties’ financial circumstances. Further, a modification motion based on the retirement of the obligor is a unique type of modification motion and requires a thorough analysis of retirement-specific factors. If you want to discuss pursuing a change to spousal maintenance because of your impending retirement, please contact Bravura Group, P.C. for an initial consultation.