Protecting Yourself

As our life spans increase, there is some anecdotal evidence that divorce rates among couples over 60 years old are rising. I’ve seen this in my own practice in the last couple of years. With the kids grown and on their own, the issues in divorce over 60 usually come down to division of property and spousal support (what used to be called alimony). We learned how to divide community property (the property acquired during marriage) back when we were in elementary school. Absent special exceptions, you just divide by two. Spousal support in a divorce where the parties are over 60 is more problematic, however. The non-working spouse, usually the wife, loses out, but it could easily be the husband.

Here’s the problem: The case of In Re Marriage of Reynolds (1998) 63Cal.App.4th 1373 states that no one can be compelled to continue working beyond a normal retirement age in order to maintain a prior level of spousal support. Normal retirement age probably means 65, but could be younger. The Court of Appeal stated: “Just as a married couple may expect a reduction in income due to retirement, a divorced spouse cannot expect to receive the same high level of support after the supporting spouse retires.” This doesn’t mean that spousal support ends, but it will most likely be reduced. Example: Ex-husband is paying $5,500 per month spousal support based on his earnings of $17,000 per month. Ex-husband retires at age 65 and asks the court to reduce his spousal support based on his retirement income only. Winner: Ex-husband, because he has the absolute right to retire at age 65. Loser: Ex-wife, who was depending on the $5,500 per month spousal support and now must learn to live on less.

One way of avoiding the Reynolds trap might be to purchase an annuity or other income-producing asset, such as bonds. If you don’t consider how the Reynolds case migh impact your divorce, you could end up with less spousal support than you bargained for or received from the Court. One more thing: The Reynolds case probably would not apply to cases where the issue is child support. This means that if you have minor children later in life and get divorced, you’ll either keep working past age 65 to support your kids or the income will be imputed to you.