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Posted on May 9, 2021

Retirement And Maintenance In An Illinois Divorce

Maintenance, formerly known as “alimony” in Illinois, is a way to further insure an equitable division of finances between two spouses who have unequal incomes. One spouse has relied on the other spouse for regular financial support, the Illinois legislature states the supporting spouse should continue to support their ex-spouse in a definite amount for a period of definite time.

Ordering maintenance for a defined duration of time makes sense if the supporting spouse is going to be working for the entirety of that defined duration of time. But, if the supporting spouse is likely to retire during that defined duration, certain considerations must be taken.

How Does Maintenance Normally Get Calculated In An Illinois Divorce?

Maintenance is typically awarded on a “guidelines basis.”

“[I]f the court finds that a maintenance award is appropriate, the court shall order guideline maintenance” 750 ILCS 5/504(b-1)

Guidelines maintenance “shall be calculated by taking 33 1/3% of the payor’s net annual income minus 25% of the payee’s net annual income” 750 ILCS 5/504(b-1)(1)(A)

This is followed by a big caveat that limits the amount the payee can receive under a guidelines basis.

“The amount calculated as maintenance, however, when added to the net income of the payee, shall not result in the payee receiving an amount that is in excess of 40% of the combined net income of the parties.” 750 ILCS 5/504(b-1)(1)(A)

Guidelines maintenance then lasts for a specific amount of time based on how long you were married.

In Illinois, maintenance “shall be calculated by multiplying the length of the marriage at the time the action was commenced by whichever of the following factors applies: less than 5 years (.20); 5 years or more but less than 6 years (.24); 6 years or more but less than 7 years (.28); 7 years or more but less than 8 years (.32); 8 years or more but less than 9 years (.36); 9 years or more but less than 10 years (.40); 10 years or more but less than 11 years (.44); 11 years or more but less than 12 years (.48); 12 years or more but less than 13 years (.52); 13 years or more but less than 14 years (.56); 14 years or more but less than 15 years (.60); 15 years or more but less than 16 years (.64); 16 years or more but less than 17 years (.68); 17 years or more but less than 18 years (.72); 18 years or more but less than 19 years (.76); 19 years or more but less than 20 years (.80). For a marriage of 20 or more years, the court, in its discretion, shall order maintenance for a period equal to the length of the marriage or for an indefinite term.” 750 ILCS 5/504(b-1)(1)(B)

What If You Are Going To Retire Soon And You Are Getting An Illinois Divorce?

If you are close to retirement and considering divorce, you are likely to have been married to your spouse for a long time. Thus, the duration of your alimony can be expected to be almost equally as long as the marriage. You’re not likely to work that long. You might not even live that long.

“[A]ssuming a worker lives long enough, it is inevitable and foreseeable that he will retire.” In re Marriage of Schrimpf, 293 Ill. App. 3d 246, 254 (Ill. App. Ct. 1997)

If your Illinois divorce is not yet finalized but your retirement is on the horizon, then you should alert your spouse, the opposing counsel and your divorce judge to the factors they must consider when setting a maintenance amount and duration of the maintenance payments.

Before ordering guideline maintenance. “[t]he court shall first make a finding as to whether a maintenance award is appropriate, after consideration of all relevant factors” 750 ILCS 5/504(a)

Several of the factors the court must consider before awarding maintenance in an Illinois divorce are directly impacted by a pending retirement.

“[T]he realistic present and future earning capacity of each party” 750 ILCS 5/504(a)(3)

“[A]ny impairment of the realistic present or future earning capacity of the party against whom maintenance is sought” 750 ILCS 5/504(a)(5)

“[T]he tax consequences to each party” 750 ILCS 5/504(a)(8)

“[T]he age, health, station, occupation, amount and sources of income, vocational skills, employability, estate, liabilities, and the needs of each of the parties” 750 ILCS 5/504(a)(9)

While these factors will probably not impact the amount of maintenance in a pending divorce, the duration of maintenance can be reserved if retirement is truly looming. Illinois courts must consider future income as well as current income when determining maintenance.

“The ability of the maintenance-paying spouse to contribute to the other spouse’s support can be properly determined by considering both a current and future ability to pay ongoing maintenance.” In re Marriage of Blume, 2016 IL App (3d) 140276

Retirement can likely be listed as a contemplated substantial change in circumstances which will allow for a modification of maintenance at the time of retirement.

“[I]t is not unfair or an abuse of discretion for the trial court to tie the duration of petitioner’s maintenance to the date of her former husband’s retirement.” In re Marriage of Puls, 645 NE 2d 525 – Ill: Appellate Court, 1st Dist., 3rd Div. 1994

“The duration of a maintenance award is a matter within the sound discretion of the circuit court and will not be disturbed absent an abuse of discretion.” In re Marriage of Claydon, 715 NE 2d 1201 – Ill: Appellate Court, 4th Dist. 1999

What If I Am Retiring After My Illinois Divorce Is Final?

Maintenance can always be modified after an Illinois divorce unless the parties agreed that the maintenance will be non-modifiable.

“An order for maintenance may be modified or terminated only upon a showing of a substantial change in circumstances.” 750 ILCS 5/510(a-5)

“[T]he court shall consider the applicable factors set forth in subsection” the court shall consider the applicable factors set forth in subsection:

“[A]ny change in the employment status of either” 750 ILCS 5/510(a-5)(1)

Retirement is definitely a change in employment. Retirement is a voluntary change in employment which Illinois courts usually don’t look fondly upon for maintenance modification purposes. But, sooner or later, everyone gets to retire.

“Employment changes that are voluntary must be made in good faith and not prompted by a desire to avoid maintenance obligations.” In re Marriage of Waldschmidt, 608 NE 2d 1299 – Ill: Appellate Court, 4th Dist. 1993

Good faith retirements are largely determined by the motivation of the retiree. “In determining whether…a change in employment is made in good faith, the crucial consideration is whether the change was prompted by a desire to evade financial responsibility.” In re Marriage of Verhines, 2018 IL App (2d) 171034, ¶ 83 (citations omitted)

So, complaints of the current work and the imaginings of retired bliss are sufficient to establish a good faith basis for retirement. Of course, it is probably better to elaborate on why retirement is necessary due to age and health.

“Whether a spouse may voluntarily retire or cut back on his income depends on the circumstances of each case. Relative factors are the age, health of the party, his motives in retiring, the timing of the retirement, his ability to pay maintenance even after retirement and the ability of the other spouse to provide for himself or herself.” In re Marriage of Smith, 396 NE 2d 859 – Ill: Appellate Court, 2nd Dist. 1979

“Whether a spouse may rely on his retirement as a change in circumstances to justify the modification of maintenance depends upon the circumstances of each individual case. Relevant factors include his age, health, motives and timing of retirement, ability to pay maintenance after retirement, and the former spouse’s ability to provide for herself.” In re Marriage of Waller, 625 NE 2d 363 – Ill: Appellate Court, 1st Dist., 6th Div. 1993

“[T]o the extent that the 65-year-old husband’s decrease in income was voluntary, it was under circumstances reflecting his “right, at some point, to retire or substantially reduce his working hours” In re Marriage of Colombo, 197 Ill. App. 3d 767, 769 (Ill. App. Ct. 1990) quoting Smith, 77 Ill. App.3d at 863

Not all retirements are really retirements. Some retirements don’t even warrant a reduction in maintenance.

“[Litigants have] a right, at some point, to retire or to substantially reduce his working hours….[but] this will not necessarily justify a reduction or a termination in maintenance.In re Marriage of Waller, 625 NE 2d 363 – Ill: Appellate Court, 1st Dist., 6th Div. 1993

“Our courts have been sympathetic to pleas for a reduction in alimony payments where some fortuitous occurrence has diminished the ability of the husband to meet his obligation to his former wife. But where the change in circumstances has been brought about by the actions of the husband the courts have refused to allow a reduction.” In re Marriage of Smith, 396 NE 2d 859 – Ill: Appellate Court, 2nd Dist. 1979

How To Argue Against A Reduction In Maintenance Because Of Your Ex-Spouse’s Retirement

Retirement and maintenance modification may be inevitable to the retiring spouse, but the maintenance receiving spouse still needs the maintenance that was ordered.

The best argument that maintenance should continue after retirement is that the retiring spouse can still afford maintenance post-retirement.

“Where a payor spouse has sufficient assets to continue to meet his or her maintenance obligation after retirement, a reduction in income does not, in and of itself, constitute a substantial change in circumstances to support a termination or reduction of maintenance.” In re Marriage of Folley, 2021 IL App (3d) 180427, ¶ 38

The next best argument to continue maintenance after retirement is that the retirement is entirely triggered by the choices of the retiring spouse, therefore the maintenance receiving spouse should not be punished for those choices.

“Where the change in circumstances was brought about by the party seeking the reduction in alimony payments, the court has not hesitated to reverse the granting of such reductions.” Shellene v. Shellene, 52 Ill. App. 3d at 891

The case of In re Marriage of Tenhouse, 2023 IL App (4th) 230119-U, lays out some more possibly viable arguments for continuing maintenance despite a voluntary retirement.

“(1) Under section 510(a-5) of the [Illinois Marriage and Dissolution of Marriage] Act, even if both parties contemplated or foresaw that [the retiring spouse] was going to retire early, there is no mention of it in the Judgment, thus even if contemplated, early retirement cannot be used as a factor for modifying maintenance.”
(2) [A] court [should not] focus[] solely on whether [the retiring spouse] retirement was in good
faith [without] giv[ing] any weight to whether [the retiring spouse] had the ability to continue
to pay maintenance.

(4) ..[R]etirement [can be] in bad faith; [when] retirement was not long after the maintenance award, and [the retiree’s] motivation was his enjoyment of life, not his health or necessity.
(5) Under cases such as In re Marriage of Smith, 77 Ill. App. 3d 858, 396 N.E.2d 859 (1979), the court should base maintenance on the payor’s ability to pay, not his or her willingness to work.
(6) If [the maintenance receiver] “can be required to use marital assets she received in lieu of maintenance…it only makes sense that [the maintenance payor] should equally be required to use marital assets he received to pay maintenance.

(8) [The retiring ex-spouse] agreed to pay lifetime maintenance and should be held to his agreement.” In re Marriage of Tenhouse, 2023 IL App (4th) 230119-U

The court in Tenhouse did not think much of these arguments. Contemplation no longer matters for modifications of support.

“Contemplation or foreseeability of future events shall not be considered as a factor or used as a defense in determining whether a substantial change in circumstances is shown, unless the future event is expressly specified in the court’s order or the agreement of the parties incorporated into a court order.” 750 ILCS 5/510(a)(1)

Mrs. Tenhouse was really mad that the court told her, “Relax, you’re getting half his pension payments when your ex-husband retires so you don’t need maintenance anymore.” The court found that Mrs. Tenhouse “insist[ing that] retirement assets divided in a divorce cannot substitute, even partially, for maintenance [is wrong]. The purpose of retirement assets is to substitute for employment income upon the earner’s retirement. This purpose does not change when those assets are divided in a divorce.” In re Marriage of Tenhouse, 2023 IL App (4th) 230119-U

Retirement Assets And Maintenance After An Illinois Divorce.

Most retired people are retiring because they have enough money to live off of without working. So, in almost every motion to modify maintenance during retirement will consider the assets of the parties.

When determining maintenance amounts and duration, Illinois divorce courts will consider “[T]he property, including retirement benefits, awarded to each party under the judgment of dissolution of marriage, judgment of legal separation, or judgment of declaration of invalidity of marriage and the present status of the property” 750 ILCS 5/510(a-5)(6)

“Where a payor spouse has sufficient assets to continue to meet his or her maintenance obligation after retirement, a reduction in income does not, in and of itself, constitute a substantial change in circumstances to support a termination or reduction of maintenance.” In re Marriage of Folley, 2021 IL App (3d) 180427

These retirement funds should be generating income and maintenance is calculated based on income in Illinois.  

A “waiver of any interest in ‘pension and/or profit sharing plans’ [is] not also a waiver of the income generated from the plans.” In re Marriage of Munford, 527 NE 2d 892 – Ill: Appellate Court, 1st Dist. 1988

In Illinois, income from assets that have already been divided in a divorce can be used to calculate child support owed but income from assets (already divided) cannot be used to calculate maintenance.

The theory is that money in a retirement account has already been earned once so withdrawing that money, while it creates a taxable event, is not truly current income.

“401(k) and retirement account withdrawals [have] the practical effect of increasing [a party’s] taxable income for the year, but, in reality, they represented the depletion of [the party’s] retirement savings earned in prior years when maintenance payments were paid to [the other party].” McLauchlan v. McLauchlan, 966 N.E.2d 1151, 1153 (Ill. App. Ct. 2012)

“Except for the tax benefits a person gets from an IRA and the penalties he or she will incur if he or she withdraws the money early, an IRA basically is no different than a savings account…The money the individual places in an IRA already belongs to that individual. When an individual withdraws money he placed into an IRA, he does not gain anything as the money was already his.” In re Marriage of O’Daniel, 889 NE 2d 254 – Ill: Appellate Court, 4th Dist. 2008

Furthermore, these assets were already divided in the divorce. So, any further allocation of the assets or their income constitutes an amendment to the property division…which is not allowed.

“While maintenance provisions are modifiable upon a showing of a substantial change in circumstances, property settlement provisions are not.” In re Marriage of Munford, 527 NE 2d 892 – Ill: Appellate Court, 1st Dist. 1988

“The provisions as to property disposition may not be revoked or modified, unless the court finds the existence of conditions that justify the reopening of a judgment under the laws of this State.” 750 ILCS 5/510(b)

So, if one party has waived an interest in an asset during the divorce (simply by awarding the asset to the other party), that party cannot ask for any part of the income proceeds from that asset for the purposes of maintenance.

“When determining maintenance, withdrawals from a liquidated asset in which the other party had previously waived any future interest do not constitute income.” In re Marriage of McLauchlan, 966 NE 2d 1151 – Ill: Appellate Court, 1st Dist., 2nd Div. 2012

If a party has been awarded significant assets in an Illinois divorce, they are not required to sell those assets and live off those assets in lieu of maintenance.

“[A spouse] is not obligated to sell her assets to generate income to support herself where [the other spouse] has sufficient income to meet his needs while meeting hers.” In re Marriage of Heller, 505 NE 2d 1294 – Ill: Appellate Court, 1st Dist. 1987

“[I]t is well settled that she is not required to sell her assets or impair her capital in order to generate income from which she can support herself in the manner enjoyed during the marriage” In re Marriage of Weinberg, 466 NE 2d 925 – Ill: Appellate Court, 1st Dist. 1984

“[A] spouse seeking maintenance is not required to sell her assets or impair her capital in order to maintain herself in the manner established during the marriage” In re Marriage of Thornton, 412 NE 2d 1336 – Ill: Appellate Court, 1st Dist. 1980

Social Security And Maintenance In An Illinois Divorce case

Sometimes an ex-spouse can get more money from the government than they could get from a maintenance payment. Even if that is the case, it is no excuse to reduce alimony.

An Illinois court cannot “[take] into account [a party’s] eligibility for public assistance when determining whether maintenance should be terminated.” In re Marriage of Anderson, 951 NE 2d 524 – Ill: Appellate Court, 1st Dist., 5th Div. 2011

So, don’t expect to modify your maintenance just because your spouse is now collecting social security benefits.

If you’re retiring, or your spouse is retiring and there is any kind of maintenance being paid through an Illinois court order, you need to know the law and how to apply the law. Contact our Chicago, Illinois, family law firm to schedule a free consultation with an experienced Chicago divorce lawyer.

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Russell Knight

Russell D. Knight has been practicing family law as a Chicago divorce lawyer since 2006. Russell D. Knight amicably resolves tough cases while remaining a strong advocate for his client’s interests.

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