As always, prior to reading this post please review my disclaimer by following the above link or by clicking on this link. As always, any legal principles discussed apply only to the Commonwealth of Virginia.
Update (4/27/18): Please note that some of the information in the blog post below is now outdated due to changes in the law. Please see my 2018 Relevant Changes in the Law post for details.
Introduction
If you go back 100 years or so, when our modern laws about spousal support (then, of course, just known as alimony) and child support were starting to emerge, "retirement" was a vague, largely unheard of concept. Most people were either wealthy, or worked until they died. As a result, there was not much of a need for our support laws to take retirement into account.
Of course, this has not been the case for some time now, and the vast majority of workers expect to retire some day (usually with a dream that involves some combination of travelling and beaches). But what about people who have children later in life, and hit retirement age while still owing child support? Or what about people who are ordered by a court to pay long-term (or even indefinite) spousal support? Support orders are supposed to take into account the life circumstances of the parties, including their incomes, so how does support change when you hit retirement?
In fact, retirement is a complicated issue in support law - but often one that leaves retirees or those desiring to retire greatly disappointed. I hope to address those issues here.
"Material Change"
The first rule to remember is that if you already have a child support or spousal support order, it cannot be modified by a court unless the party seeking the modification proves that there has been a "material change in circumstances" since the last time a support order was entered. A material change is generally seen as some change in circumstances that directly affects the factors that go into determining support (income, expenses, age of children, etc.) which is not simply a minor change (for example, a change in income of $5 per month). However, it is important to note that there is no material change in circumstances, legally speaking, if the only "material change" is one brought about by the "voluntary conduct" of the party seeking the change.
Now, there are two key distinctions to make to that last rule. First, the conduct must be voluntary for that rule to kick in. Something beyond your control (your car gets totaled in an accident that wasn't your fault so now you have the expenses of a new one, you got laid off from work, etc.) is not voluntary, so it still counts as a material change. Second, if you are the party seeking the change, it must be your voluntary conduct that caused the material change. If the other party's voluntary conduct caused a material change (such as switching to a new, higher paying job), you can still file.
So, how does this apply to retirement? Well, it generally means that retirement is not, in and of itself, a sufficient reason to get support changed. Courts presume you would not retire if you have not lined up enough money to pay your bills (including your support bills) in retirement, and as such treat retirement as voluntary conduct - and not a material change in circumstances. If, however, you are forced into retirement (for example, your company has a maximum age, you are given the option of retirement in lieu of termination, you need to retire due to health, etc.), then that can constitute a material change. If you just on your own, however, decide you are of the age where you want to retire, that will not count as a material change, and if that is the only material change you can allege, then you will not be able to modify your support.
Voluntary Underemployment
Now, many people who retire frequently will find other material changes to get their foot in the door for modification. If it's been many years since the last support order, it's very likely your needs will change. In fact, the Division of Child Support Enforcement (note, this is just DCSE, not the courts) considers the passage of 3 years' time to automatically be a material change, and while the courts do not follow the same rule, if it's been at least 3 years, the odds are pretty good you can find something.
If you do get your foot in the door, however, don't think you are walking down easy street. As I have discussed before, when considering your income, you have the burden to show the court that you are not "voluntarily" unemployed or underemployed. If you do not meet that burden, the court will assign to you the income it thinks you should be making. If you retired voluntarily, the odds are the court will assign to you the income you would be making if you were still working.
However, voluntary unemployment is a one-way street. "Income" is considered to be income from any source, and if, between your pension, withdrawals from a 401(k) and/or IRA, and other forms of non-wage income you actually make more money in retirement than you did working, your higher current income will be used.
Because of how the court views retirement as voluntary conduct, and voluntary unemployment, it is very unlikely that an individual can actually get his or her support obligations cut (or increased, for that matter, if you are the one receiving support) due to retirement. There are, however, two big exceptions to this rule.
Exception 1: Split Pensions
If you work in a job that provides a pension, and some of that work occurred while you were married, chances are your ex-spouse is entitled to some of that pension. Once you retire and start receiving your pension, your ex-spouse will start receiving his or her portion of your pension as well. Once that begins, your ex-spouse will now have more income, which produces both a material change, and a basis to reduce support.
Exception 2: Agreement
It is not uncommon for an agreement which establishes indefinite spousal support to also have a retirement clause. Remember that when spousal support is set by signed agreement, that agreement is binding and not modifiable by a court. As a result, if the agreement says something different than the above regarding retirement (for example, "Retirement after age 62 is automatically considered involuntary"), the terms of the agreement win out.
Planning for Retirement Support
Given the above, it is important then to plan for support payments in retirement. You should presume that when you retire, you will have to continue support at its current levels (except that child support will terminate when the child becomes an adult), and include these costs in your retirement financial planning. Remember also, however, that there comes a point when retirement is no longer voluntary. If you retire at age 60, but start having physical ailments that would prevent you from working at age 65, then that could be a material change in circumstances - your unemployment had gone from voluntary to involuntary because if you were still working you would have had to retire. As such, you will not be stuck forever, but as long as your health remains good, you will still have to pay your support.
This is, in my opinion, another reason why when negotiating spousal support you should be very hesitant about ever agreeing to indefinite support unless there is something like a retirement clause. The chances are, when you have indefinite support, you will be paying long after you retire.
Conclusion
Retirement presents a panoply of challenges in regards to legal support obligations, most of them not very favorable to the retiree. If you are involved in a support situation and are considering retirement, retired, or the other party is retiring, please feel free to call (703)281-0134 or e-mail me at sleven@thebaldwinlawfirm.com to set up an initial consultation to discuss the matter. Our initial consultations are free for up to half an hour!
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