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Many people look forward to their retirement years. After many years of hard work, you have hopefully built a comfortable nest egg so you can relax and enjoy the good things in life.

For those who have found early success, retirement can be an option at a younger age. But what happens if your early retirement choice is threatened by an unexpected divorce? Is there a reason you cannot achieve your retirement dream?

Retirement Reality Check

The bottom line is that the court will not prohibit you from taking the early retirement you desire. However, in determining your income for purposes of child support or spousal maintenance (if such payments are applicable to your case), it is possible that the court will assess you the income that you would have continued to earn had you not taken early retirement.

What Is Considered?

How the court views your retirement will be impacted by the value of the assets that will be divided between you and your spouse. If your post-retirement assets and cash flow–absent the divorce–would have allowed you and your spouse to approximate your pre-retirement lifestyle, it is much less likely that the court will attribute to you continued employment income. Since the assets accumulated during marriage (including retirement benefits) will be divided equally, a substantial asset award to your spouse could negate any spousal maintenance obligation you might otherwise have.

On the other hand, if your early retirement will result in a significantly lower standard of living–made even greater by the need to maintain two separate households–the court will be more likely to treat you as earning your present level of income, even if you choose not to work.

When Minor Children Are Involved

The court will also consider whether you intend to obtain income from other work endeavors, your spouse’s agreement (if it existed) with your early retirement plan, and their ability to generate income. Moreover, even if the court does not attribute income to you despite still having children at home who are minors, the Arizona Child Support Guidelines will be applied and you may still be required to pay child support on behalf of these children.

Confer With Professionals

If you already have a divorce case pending, you will want to obtain the advice on the specifics of your financial circumstances before you make any major decisions. You should speak with an attorney and an accountant or financial planner for advice on making the best decisions for your own financial future.

Contact us at Hallier Stearns PLC for advice on how early retirement decisions can impact your divorce.