Retirement and Spousal Maintenance in Illinois Divorce Proceedings
Spousal maintenance, often referred to as "alimony," serves to facilitate a fair and equitable financial arrangement between spouses when there is an income disparity between spouses who are divorcing. In cases where one spouse has been financially dependent on the other, Illinois law supports the notion that the more financially secure spouse should continue to provide support for a specified period after divorce.
Maintenance payments, which depend on various factors, are typically set for a specific amount of time, which requires that the paying spouse remain employed during that time. However, it is important to plan for retirement at a reasonable age, even for a paying spouse.
How Is Maintenance Typically Calculated in Illinois Divorces?
In Illinois, maintenance is often awarded based on specific "guidelines," which are found directly in the Illinois Marriage and Dissolution of Marriage Act.
The guideline calculation uses a standard formula that takes 33.3% of the payer’s net annual income and subtracts 25% of the payee’s net annual income (750 ILCS 5/504(b-1)(1)(A)). However, the calculated payments to the payee cannot exceed 40% of the combined net income of both parties.
Additionally, the duration of these payments is determined by the length of the marriage. Maintenance duration is calculated by multiplying the marriage length by a specific factor as outlined in Illinois law, with factors ranging from 0.20 for marriages under 5 years up to a possibility of indefinite maintenance for marriages exceeding 20 years (750 ILCS 5/504(b-1)(1)(B)).
What If You're Nearing Retirement During Your Illinois Divorce?
For individuals close to retirement who have been married for a long time, the duration of spousal maintenance can be quite significant. If you plan to retire soon, it’s important to notify your spouse, opposing counsel, and the judge. This allows retirement considerations to be factored into the calculation of the maintenance amount and duration. To learn more about how retirement funds are impacted during a divorce, read our piece called Understanding Retirement Funds in Illinois Divorce: A Guide to Planning and Protection.
Before ordering maintenance payments, Illinois courts must assess whether doing so would be appropriate, considering all relevant factors (750 ILCS 5/504(a)). Factors that can be impacted by an impending retirement include:
- The realistic present and future earning capacity of each party (750 ILCS 5/504(a)(3))
- Any impairment of earning capacity of the party against whom maintenance is sought (750 ILCS 5/504(a)(5))
- Tax consequences to each party (750 ILCS 5/504(a)(8))
- The age, health, income, employability, and needs of each party (750 ILCS 5/504(a)(9))
Courts are tasked with evaluating both current and future income when setting maintenance, which means that retirement could be grounds for modifying maintenance.
What Happens If You Retire After Your Illinois Divorce Is Finalized?
Maintenance can generally be modified post-divorce in Illinois, provided there’s a "substantial change in circumstances" (750 ILCS 5/510(a-5)). Retirement qualifies as such a change, but the courts will scrutinize whether this change was 1) something that could have been known and planned for in the original divorce; and 2) made in good faith. If retirement is genuine and not an attempt to evade financial obligations, the court may consider adjusting maintenance.
The court looks at a variety of factors such as age, health, motives for retirement, and the ability to continue paying maintenance post-retirement. See In re: Marriage of Smith.
How to Challenge a Reduction in Maintenance Due to Retirement
For the spouse receiving maintenance, there are strategies to argue against a reduction due to the payor's retirement. The strongest argument is if the paying spouse has sufficient assets to continue meeting their maintenance obligations post-retirement See In re: Marriage of Folley, 2021 IL App (3d) 180427 ¶ 40. Furthermore, if the decision to retire was entirely voluntary, it’s reasonable to assert that the maintenance recipient shouldn’t be penalized for the payor’s choice.
Retirement Assets and Maintenance Post-Divorce
Retirement assets are crucial in post-divorce maintenance determinations. Illinois courts will consider the retirement benefits awarded to each party (750 ILCS 5/510(a-5)(6)). If the paying spouse has sufficient assets, retirement itself doesn’t automatically warrant a reduction or termination of maintenance. See In re: Marriage of Folley, 2021 IL App (3d) 180427 ¶ 40.
In essence, the law does not require the recipient of substantial assets in a divorce to liquidate those assets in place of receiving maintenance. See In re Marriage of Heller, 153 Ill. App. 3d 224, 230 (1st. Dist. 1987).
Social Security and Maintenance Considerations
Finally, eligibility for social security benefits or other public assistance does not justify the termination or reduction of maintenance payments in Illinois, and social security cannot be considered in property division in divorce, either. See In re Marriage of Mueller, 2015 IL 117876, ¶ 29.
In conclusion, navigating spousal maintenance in the context of retirement during or after an Illinois divorce requires a thorough understanding of the law, and strategic planning can significantly influence the outcome. For personalized legal guidance specific to your situation, it's recommended to consult with experienced legal professionals who can advocate on your behalf.
