Have You Considered Retirement In Alimony Calculations?

Post-divorce retirement adds a host of complications to alimony calculations. New Jersey law has provided little guidance in these matters until the recent ruling on Krupinski v. Krupinski, which offered a precedent that can be used in future negotiations. However one of the important conclusions that can be drawn from the Appellate Division ruling is that retirement should be considered at the time of the divorce when CIS, Easy Soft’s NJ matrimonial software, can be of help.

Retirement’s Effects On Alimony

Often when couples divorce, retirement is decades away so not the first asset that anyone, including a family law attorney, considers. It’s important to understand that retirement has an effect on both parties from the beginning of the split.

After divorce the alimony payer has less discretionary money, making it harder to find the money to save for retirement. Income typically drops after retirement, so that may be a reason to lower alimony payments. This in turn affects the recipient who needs to be prepared for the loss of income. Finally, in the event of a pension rather than a 401K plan, should the spouse be entitled to a portion of the pension payments in addition to alimony?

Deal With Retirement Up Front

None of these considerations should come as a surprise. Retirement happens and should be part of anyone’s financial plan, divorced or not. The impact of retirement should be on the attorney’s mind from the first time the Case Information Statement is filled out.

The Krupinski case dealt only with alimony but in some cases it may also affect child support. Early retirement combined with children who were born late in life, are in college, or have permanently disabilities could create rare situations where retired parents might have to consider how a pension would affect the child’s welfare.

Although this may be less of a problem than it used to be, considering New Jersey’s recent elimination of permanent alimony, it is still an issue especially in light of the increase in gray divorce over the last decade or so. Easy Soft CIS software is a valuable tool for attorneys, not only helping complete the Case Information Statement NJ requires in divorces, but also providing analysis tools needed to compare various alimony and child support scenarios.