Can you voluntary retire at a normal retirement age and go to court to lower the amount of your alimony payments?
Before recently, this question was not that clear. Now Virginia's legislature has stepped in and given some guidance to this recurring question. The new statute provides much needed clarity and specific guidelines for courts to use in modifying the amount of alimony to be paid when a person voluntarily retires. Before the new statute, it was a murky matter on whether a court would reduce alimony payments when a person reached retirement age and decided to voluntarily retire.
This new statute is Virginia Code Section 20-109(E), 20-109(F), and 20-109(G) and it states:
E. For purposes of the modification of an award of spousal support, and without precluding the ability of a party to otherwise file for a modification of spousal support based upon any other material change in circumstances, the payor spouse's attainment of full retirement age shall be considered a material change in circumstances. For the purposes of this subsection, "full retirement age" means the normal retirement age at which a person is eligible to receive full retirement benefits under the federal Social Security Act, but "full retirement age" does not mean "early retirement age" as defined under the federal Social Security Act (42 U.S.C. § 416, as amended).
F. In an action for the increase, decrease, or termination of spousal support based on the retirement of the payor spouse pursuant to subsection E, where the court finds that there has been a material change in circumstances, the court shall determine whether any modification or termination of such spousal support should be granted. In making such determination, the court may consider the factors set forth in subsection E of § 20-107.1 and shall consider the following factors:
1. Whether retirement was contemplated by the court and specifically considered by the court when the spousal support was awarded;
2. Whether the retirement is mandatory or voluntary, and the terms and conditions related to such retirement;
3. Whether the retirement would result in a change in the income of either the payor or the payee spouse;
4. The age and health of the parties;
5. The duration and amount of spousal support already paid; and
6. The assets or property interest of each of the parties during the period from the date of the support order and up to the date of the hearing on modification or termination.
G. In any action for the increase, decrease, or termination of spousal support, if the court finds that there has been a material change in circumstances, the court may consider the factors set forth in subsection E of § 20-107.1 and subsection F of this section in making its determination as to whether any modification or termination of such support should be granted. The court shall further consider the assets or property interest of each of the parties from the date of the support order and up to the time of the hearing on modification or termination, and any income generated from the asset or property interest. Any order granting or denying a request for the modification or termination of spousal support shall be accompanied by written findings and conclusions of the court identifying the factors set forth in subsection E of § 20-10
Legal research by the National Legal Research Group provides commentary on the state of the law prior to the enactment of the new statute:
Virginia applies a two-pronged test to determine whether spousal support can properly be modified. "Code § 20-109(A) provides that '[u]pon petition of either party the court may increase, decrease, or terminate the amount or duration of any spousal support and maintenance ... as the circumstances may make proper.' Under this provision, the party moving for a modification of support payments must prove 'both  a material change in circumstances and  that this change warrants a modification of support.'" Barnes v. Barnes, 64 Va. App. 22, 29, 763 S.E.2d 836, 839 (2014) (emphasis added), quoting Schoenwetter v. Schoenwetter, 8 Va. App. 601, 605, 383 S.E.2d 28, 30 (1989). "The moving party in a petition for modification of support is required, therefore, to prove both a material change in circumstances and that such change justifies an alteration in the amount of support." Yohay v. Ryan, 4 Va. App. 559, 566, 359 S.E.2d 320, 324 (1987).
Before the new statute was enacted, retirement, alone and by itself, was clearly not a substantial change in circumstances. In Barnes v. Barnes, 64 Va. App. 22, 29, 763 S.E.2d 836, 839 (2014), the husband there sought a reduction in support. He proved that he had retired and was suffering from dementia. The wife then moved to dismiss, arguing that these facts showed only a change in circumstances, and did not show a change which justified a reduction in support. The trial court agreed and dismissed the case, and the Court of Appeals affirmed:
In the present case, appellant failed to show how, if at all, his dementia and retirement have adversely affected his financial and economic status since the previous spousal support award. Rather, appellant's evidence only demonstrated that he developed dementia, retired, and currently has a monthly income of $3,444-notably absent is any evidence demonstrating how appellant's income is different than it was 1991. Viewing this evidence in the light most favorable to appellant, it failed to show that appellant has suffered any "financial or economic" changes in circumstances, Hollowell, 6 Va. App. at 419, 369 S.E.2d at 452-53, that "bear upon . . . [his] ability . . . to pay" appellee's spousal support, Moreno, 24 Va. App. at 195, 480 S.E.2d at 795. Phrased differently, there is no indication that appellant's current financial status-and thereby his ability to pay appellee's spousal support-is any different than it was in 1991. Without such a showing, the trial court was without any basis for determining how, if at all, the current spousal support order should be modified.
Barnes v. Barnes, 64 Va. App. 22, 29-30, 763 S.E.2d 836, 840 (2014) (footnote omitted).
The leading Virginia case before the new legislation was enacted on modification of spousal support at retirement was the en banc decision in Stubblebine v. Stubblebine, 22 Va. App. 703, 473 S.E.2d 72 (1996). The husband in Stubblebine initially served in the military. He retired from that profession during the marriage, and accepted a position as a civilian defense consultant. He retired from this position shortly before his divorce, at the age of 64, but his retirement was quite active. He worked 50-60 hours per week without pay for a private organization investigating psychic phenomena, and he worked twenty additional hours per week without pay managing his woman friend's psychiatric practice. The issue before the court was the amount of the husband's initial spousal support obligation. The husband contended that the court should award no support, because he had no income and the wife was already receiving 50% of both his retirement pensions.
The trial court disagreed and imputed income to the husband. The amount imputed was not the husband's pre-retirement salary of $90,000, but rather the $40,000 salary he could earn from post-retirement consulting work. A panel of the Court of Appeals affirmed, Stubblebine v. Stubblebine, 21 Va. App. 635, 466 S.E.2d 764 (1996), and the entire court sitting en banc affirmed the panel decision. Stubblebine v. Stubblebine, 22 Va. App. 703, 473 S.E.2d 72 (en banc 1996). The en banc opinion relied upon traditional imputation of income reasoning:
[T]he Supreme Court in [Antonelli v. Antonelli, 242 Va. 152, 409 S.E.2d 117 (1991)] acknowledged that in making support awards, trial courts must consider "bona fide and reasonable" employment decisions which result in the payor spouse earning less income. Such decisions would include retirement, and we find this reasoning persuasive and applicable to the circumstances of this case. When considering the issue of spousal support, whether in a modification or initial award determination, the trial court must take into account the receiving spouse's needs and ability to provide for the needs, and balance those against the other spouse's ability to provide support, even when the payor spouse has retired in good faith at a "normal" retirement age. . . .
. . . When considering an initial spousal support order or a modification, the trial court must consider each spouse's current circumstances, including the fact that a party has retired, the parties' plans and expectations associated with the retirement, and each parties' earning capacities and needs at the time of the hearing. However, the trial court cannot ignore the policy underlying Code § 20-107.1 which balances the parties' incomes or their capacities to earn income against their respective needs.
473 S.E.2d at 75. Applying this test to the facts, the court continued:
As that balance applies to the facts of this case, Albert Stubblebine had provided most of the financial support during the marriage. After his retirement, he had been gainfully employed and contributed significantly to his wife's support, up until the divorce, at a level that exceeded his retirement income. Geraldine Stubblebine suffers from several chronic diseases and is unable to work. Her one-half share of Mr. Stubblebine's two retirement pensions would provide a monthly income of $3,058, while her evidence proved monthly expenses in the range of $5,200.
Albert Stubblebine, as his current activities demonstrate, is capable of gainful employment. However, regardless of whether Albert Stubblebine had chosen a more relaxed retirement rather than pursuing an active retirement, the fact remains that he is capable of gainful employment. Moreover, he worked and contributed to his wife's living standard until five months before the divorce. On these facts, the trial court did not abuse its discretion by imputing income to Albert Stubblebine[.]
473 S.E.2d at 75-76.
The court in Stubblebine clearly held that the final level of support depended upon a balancing of the husband's ability to pay against the wife's needs. It expressly held that good-faith retirement was a factor in this balancing, presumably weighing against imputation of income. So far, the opinion somewhat favors a reduction of support upon retirement.
On the facts, however, the good-faith retirement factor was overcome by other concerns. The key sentence in that court's opinion provided that "[r]egardless of whether Albert Stubblebine had chosen a more relaxed retirement rather than pursuing an active retirement, the fact remains that he is capable of gainful employment." Id. at 76. This sentence seems to suggest that because the husband was capable of working, therefore he was required to work.
The result in Stubblebine was to some extent influenced by the husband's unusual character. His strong interest in psychic phenomena, combined with the fact that he retired for the second time only a few months before the divorce, made him an unsympathetic payor. Conversely, the wife had strong financial need and was unable to work for medical reasons, making her a very sympathetic payee. A reasonable argument exists that the result in Stubblebine depended heavily upon these points.
While Stubblebine did impute income to the husband, the critical fact is that the court did not impute to the husband his full $90,000 pre-retirement salary. Instead, the court imputed to the husband an income of $40,000, which was based upon his potential salary doing post-retirement consulting work. Several post-Stubblebine appellate cases present the retirement issue. In Geddis v. Geddis, No. 3167-96-1 (Va. Ct. App. Sept. 23, 1997), the wife was a retiree who was one month short of her 70th birthday at the time of trial. She had not worked as a bookkeeper for over 30 years, but spent 35 to 40 hours per week keeping the books for a friend's business. The trial court imputed income to her, reasoning that if she worked 35 hours per week without pay, she could work 35 hours per week with pay. The Court of Appeals summarily affirmed. Geddis is further evidence that the court is likely to impute income to a retiree of any age who performs without pay the same type of services normally performed by other persons for a salary.
In Shannon v. Shannon, 2008 WL 123808 (Va. Ct. App. January 15, 2008), where the issue was the husband's income for purposes of an initial spousal support award in a divorce case. Ten months before separation, the husband had voluntarily retired from the Federal Aviation Administration (FAA), moved to the parties' planned retirement home in Pennsylvania, and taken a part-time position driving a school bus. The wife contended that support should be based upon his former income with the FAA. The trial court refused to impute income and awarded the wife no support. The Court of Appeals affirmed:
The trial court, however, found wife agreed to husband's retirement, and "was perfectly willing to head into retirement with [him] even though his income decreased after he retired," when they would "live more cheaply." It found there was no evidence that husband either deceived wife as to his retirement income, or retired in anticipation of divorce.
Wife also contends the trial court abused its discretion in declining to award her current spousal support in sufficient amount to maintain the standard of living she enjoyed prior to husband's retirement in December 2004. In denying wife an award of current spousal support, the trial court noted that, "with the portion of [husband's] federal pension that [she] will be receiving coupled with her own income, she will have more income than [husband]," and in an amount sufficient to meet her expenses.
The record specifically shows the trial court considered the requisite statutory factors in Code § 20-107.1 in determining whether to grant to wife current spousal support. Id. Credible evidence in the record supports its finding that, after its equitable distribution, wife's combined income would be greater than husband's and that her income would be sufficient to meet her reasonable expenses.
2008 WL 123808 at *3.
Shannon suggests that when the parties jointly planned that one or both of them would retire on a certain date, retirement in accordance with that plan may be seen as reasonable under the circumstances, and therefore not sufficient basis for imputing income, especially where the non-retiring spouse benefits from retirement. Cf. Rawlings v. Rawlings, 20 Va. App. 663, 460 S.E.2d 581 (1995) (where wife accepted and benefitted from husband's membership in union during marriage, she was not in any position to object and seek imputation of income when union declared a strike after the divorce).
In Harber v. Harber, 2008 WL 120775 (Va. Ct. App. January 15, 2008), the husband earned $68,000 per year as a computer specialist. At age 69, he voluntarily retired from that position and moved to Florida, "apparently to pursue a romantic interest." Id. at *1. After his move to Florida, he desired additional income, so he sought employment there. " He has submitted 49 applications to schools to teach computer science, and 91 applications for work as a clerk in stores such as Office Max, Office Depot, Lowe's, Sears, etc., without receiving a job offer." Id.
At the final support hearing, the wife requested support based upon the husband's pre-retirement income. The husband sought support based upon his actual income in Florida. The trial court imputed income to the husband, but did not state a specific amount.
The Court of Appeals divided the issue into two parts: whether income should be imputed at all, and whether the court erred in failing to impute income in a specific amount. On the first issue, the court held the trial court properly decided to impute income:
In this case, we conclude the circuit court did not abuse its discretion in determining husband could have income imputed to him. Husband's ability to work is demonstrated by the fact that he has applied to well over a hundred positions in Florida. Husband has greater earning potential than wife since he possesses a college degree, whereas wife has only a high school education. Thus, the circuit court did not abuse its discretion in finding husband could have income imputed to him in spite of his retirement.
Id. at *3. With regard to the amount of income imputed, the wife contended that the trial court had implicitly accepted her argument that income should be imputed at the pre-retirement level. Citing Stubblebine, the Court of Appeals summarily disagreed,
[I]t is improper to impute income "to the payor spouse on the basis of his pre-retirement earning capacity." [footnote omitted.] Stubblebine, 22 Va. App. at 709, 473 S.E.2d at 74 (citing Donnell v. Donnell, 20 Va. App. 37, 41, 455 S.E.2d 256, 258 (1995)). In Stubblebine, the Court upheld imputation based on post-retirement contract work. Id.
Id. at *4. The omitted footnote provided:
A change in income due to retirement is fundamentally different than taking another position in a bona fide business decision, which Antonelli held could be held against the payor spouse. Antonelli, 242 Va. at 156, 409 S.E.2d at 119.
Id. n.2. Thus, the court expressly relied upon the fact that the amount of income imputed in Stubblebine was the husband's post-retirement earning capacity, not his pre-retirement earning capacity. In fact, Harber refused to impute pre-retirement earnings even though the husband retired to Florida to pursue a romantic interest. The basis for this refusal is not expressly stated, but there is reason to suspect that the 69-year-old age of the husband was significant. Regardless of post-retirement plans, retirement at age 69 is certain objectively reasonable.
Finally, the court considered whether income should be imputed to the husband at his post-retirement earning capacity. As noted above, because the husband had submitted over one hundred job applications, the court held that he had a duty to work. But his attempts to find work had been uniformly unsuccessful, and the wife had introduced no vocational evidence identifying any specific position which the husband was able to fill. Without such evidence, the court held, imputation of income was premature.
In this case, wife produced no evidence of the extent of husband's post-retirement earning capacity. It is undisputed husband had reached typical retirement age. [footnote omitted.] Husband also testified as to submitting over a hundred job applications without success. Wife, as noted above, had the burden of showing husband voluntarily had declined appropriate employment. She offered no evidence to meet this burden. The only evidence of husband's earning capacity came in the amount he earned at his pre-retirement employment. Yet as noted above, consideration of pre-retirement earning is inappropriate. Id.; Donnell, 20 Va. App. at 41, 455 S.E.2d at 258. On this record, it was error for the circuit court to impute income to husband. Thus, the case must be remanded for a re-calculation of spousal support without imputation of income.
Id. at *4. The omitted footnote provided:
In Donnell, the Court suggested retirement in good faith was key to avoiding imputation of pre-retirement income. Donnell, 20 Va. App. at 41, 455 S.E.2d at 258. As noted above, husband had reached normal retirement age. Husband testified he intended to retire after leaving his job at FOCUS, and wife offered no evidence to contradict this. Furthermore, while husband moved to Florida in June 2005, the circuit court did not enter its pendente lite decree until September 2005. The parties' property settlement agreement of December 2006 provided husband would continue to pay spousal support at the same amount as the pendente lite decree until a final award. Thus, husband did not retire in bad faith.
Id. n.3. In another footnote, the court noted that the imputation of income without stating a specific amount also violated the spousal support findings requirement, Va. Code Ann.§ 20-107.3(F):
We note that on remand the circuit court should also more thoroughly explain how it applied the factors of Code § 20-107.1(E). Code § 20-107.1(F) states that in disputed cases, "any order granting ... a request for spousal support shall be accompanied by written findings and conclusions of the court identifying the factors in subsection E which support the court's order." Code § 20-107.1(E) lists thirteen factors for a circuit court to consider before awarding spousal support. In Robinson v. Robinson, 50 Va. App. 189, 195, 648 S.E.2d 314, 317 (2007), we held subsection F imposes a mandatory duty for the circuit court to make explicit "written findings and conclusions identifying the statutory factors that support the court's ruling on a request for spousal support." Although the circuit court listed the portions of Code § 20-107.1(E) it considered, it gave no findings and conclusions beyond a summary statement. The circuit court failed to apply the facts of the case to the statutory factors, as required by Code § 20-107.1(F) and Robinson.
Id. n.4. Harber stopped short of refusing to impute income, instead remanding the case back to the trial court for additional findings. But it would seem like quite a challenge for the wife to prove that a husband with over 100 unsuccessful job applications has a substantial earning capacity.
The Donnell case on which Harber relied is Donnell v. Donnell, 20 Va. App. 37, 455 S.E.2d 256 (1995). The husband in that case was imprisoned for sexual misconduct with the parties' daughters. Shortly before starting his one-year prison term, he retired voluntarily from the Central Intelligence Agency (CIA). In setting support, the trial court imputed to the husband his full pre-retirement earning capacity. The Court of Appeals reversed:
Here, we cannot say that husband retired to avoid any obligation of support. Although husband's misconduct in years past may have contributed to his reduction in income by forcing his retirement, the latter action assured the availability of a monthly income of $1,987, even while he was incarcerated. The record before us discloses that husband had a pre-retirement "earning capacity" of $55,000 annually. Under the facts of this case, to impute income in that amount is to premise the awards upon the occurrence of an uncertain future circumstance, prohibited by Jacobs and Payne. The statutory scheme anticipates that awards will be made in light of contemporary circumstances. When justified, support awards may be redetermined in light of new circumstances. Thus, if upon release from his incarceration husband's income increased, judgment upon the then-existing circumstances may be made.
Donnell v. Donnell, 20 Va. App. 37, 41, 455 S.E.2d 256, 258 (1995). The retirement decision in Donnell was an objectively reasonable response to the husband's impending imprisonment, but the imprisonment was the result of a voluntary and criminal act. Looking past the latter point, the court refused to impute pre-retirement income, holding essentially that the past is always past, at least where no actions were taken with intent to avoid support. Donnell is a factually unique case, and not the analogy I would have selected to use in a case in which the obligor is not imprisoned as a result of his own misconduct. But Harber seemed to view the case as standing for the general proposition that support cannot be based upon past income, so long as past income was lost in good faith (e.g., without intent to avoid future support obligations).
On remand, the trial court in Harber did not impute to the husband his pre-retirement earnings. But the husband did have substantial retirement benefits, from which he was able to pay support. The court ordered the husband to pay $1,650 per month in spousal support, or just over half of the $3,000 per month initially awarded. On a second appeal, the Court of Appeals affirmed:
Here, the evidence proved that husband received approximately $4,019.50 in income per month from his pension, social security, and substitute teaching. His monthly expenses totaled approximately $1,753.50. On the other hand, wife's income was $1,142 per month from her job, and she received $250 per month from her adult daughter who lived with her. Her monthly expenses totaled approximately $4,460.
Harber v. Harber, No. 2956-08-1, 2009 WL 1916491, at *2 (Va. Ct. App. July 7, 2009)
In establishing its spousal support award, the trial court considered several factors from Code § 20-107.1. The parties were married for more than thirty years. Husband was the primary wage earner for the family, while wife raised their two children. The parties moved several times during the marriage in order for husband to further his career goals. Husband was a college graduate with advanced training, whereas wife was a high school graduate. The parties enjoyed a "nice" standard of living during the marriage.
The trial court emphasized that husband's decision to retire "was virtually at the same time" as he started a relationship with another woman and moved to Florida. The trial court noted that husband's move to Florida "was a substantial factor in reducing his ability to pay reasonable spousal support after a lengthy marriage" because husband had a "much more likely opportunity to work part-time in Hampton Roads" considering his skills, training, and education. Therefore, even though husband voluntarily retired at a normal retirement age, his decision to move to Florida greatly impacted his ability to support his wife in the manner to which she was accustomed.
Husband's obligation to support his wife did not end when he retired and moved to Florida. The trial court found that husband had the ability to pay spousal support and wife had the need for spousal support. Therefore, the trial court did not abuse its discretion in awarding wife $1,650 per month in spousal support.
Id. (emphasis added).
The end result of Harber was therefore that the husband had to pay support after retirement. But the support was based expressly upon his retirement benefits, not upon his pre-retirement earned income. The final award of $1,650 per month was 41% of the husband's retirement income of $4,019.50 per month, which is somewhat high. But the court obviously did not like the fact that the husband had moved to Florida to be closer to another woman, when his economic position was stronger in Virginia.
Note also that Harber expressly considered, as one factor favoring a support award, the 30-year duration of the marriage.
Overall, Harber is a mixed result. The court did not impute to the husband his pre-retirement earnings. The husband's decision to retire was treated as reasonable, and not as a voluntary reduction in income. But support was ultimately awarded in a lesser amount, based upon the husband's post-retirement earnings, and the amount of support was on the high side for the husband's income, probably because his post-retirement income would have been higher if he had remained in Virginia.
It may also be helpful to examine a few post-Stubblebine trial court decisions. In Poland v. Poland, 2005 WL 4277920 (Va. Loudoun County Cir. Ct. 2005), Judge James H. Chamblin reduced the husband's spousal support from $3,500 per month to $2,870 per month. The major changes in circumstances justifying the reduction was the husband's retirement and the related sale of his business:
Mr. Poland argues that he voluntarily retired in good faith and the resulting decrease in income is a basis for reducing spousal support. To the contrary, Ms. Poland argues that the principle of Antonelli v. Antonelli, 242 Va. 152 (1991) applies. She asserts that when Mr. Poland entered into the lease option with IMI he voluntarily placed himself in a position where he could lose the substantial rental income if IMI exercised the option to purchase. Because Mr. Poland's reduced income is a direct result of his voluntary act in granting IMI the option to purchase, Ms. Poland argues that Mr. Poland is voluntarily underemployed, i.e., he is not receiving the income that he had the capacity to receive when he owned the business property.
2005 WL 4277920 at *6. Despite Stubblebine, the court found that the issue before it was one of first impression:
Counsel have not cited and I have not found a Virginia case that establishes a special rule concerning the retirement of a spouse obligated to pay spousal support. Although the case involved an initial setting of spousal support, the Court of Appeals has stated:
Albert Stubblebine argues persuasively that a spousal support award should not operate to force persons who have reached usual retirement age to continue working. We do not by this opinion establish a bright-line rule requiring a payor spouse to forgo retirement in order to maintain support obligations at a pre-retirement level. Each case depends on its particular facts. See Pimm v. Pimm, 601 So.2d 534, 537 (Fla.1992); Avery v. Avery, 548 So.2d 865, 866 (Fla.Dist.Ct.App.1989).
Stubblebine v. Stubblebine, 22 Va.App. 703, 709 (1996).
2005 WL 4277920 at *6. Thus, the court relied heavily upon Stubblebine's express refusal to adopt a bright line rule. Somewhat overlooked was the fact that after denying any intention to adopt a bright line rule, Stubblebine held that the husband must work because he was able to work-a holding which comes close to establishing just the sort of bright line rule the court said it was not creating.
Continuing, the Poland court relied substantially on out-of-state authority, including the two Florida cases (Pimm and Avery) cited in the Stubblebine opinion:
Pimm held that post divorce retirement is a change of circumstance that may be considered upon a petition to modify spousal support. Avery, which involved the initial setting of permanent spousal support held that retirement is a factor to be considered and that each case must turn on its own facts.
Mr. Poland has cited other cases from other jurisdictions involving retirement. They are McFadden v. McFadden, 386 Pa. Super. 506, 563 A.2d 180 (1989) (Pennsylvania law clearly establishes that retirement can serve as a basis for the changed circumstances of a substantial and continuing nature necessary to modify an alimony award), Silvan v. Silvan, 267 N.J. Super. 578, 632 A.2d 528 (1993) (a payor spouse who retires in good faith at age sixty-five is entitled to a hearing on whether there is a resultant change in circumstances that alimony obligations should be modified citing Pimm and McFadden ), and Bogan v. Bogan, 60 S.W.3d 721 (Tenn.2001) (a bona fide retirement need only be objectively reasonable under the totality of the circumstances to constitute a substantial and material change in circumstances so as to permit a modification of spousal support).
The aforesaid cases seem to stand for an objectively reasonable standard for retirement under all the circumstances in order to justify a modification of spousal support. I think the Court of Appeals in Stubblebine recognized this same standard when it stated:
Similarly, the Supreme Court in Antonelli, 242 Va. at 155, 409 S.E.2d at 119, acknowledged that trial courts must consider "bona fide and reasonable" decisions concerning employment, which would include retirement; however, trial courts do not err or abuse their discretion in considering the extent to which the decision renders a person underemployed or unemployed. We find this reasoning persuasive and applicable to the circumstances of this case. When considering the issue of spousal support, whether in a modification or initial award determination, the trial court must take into account the receiving spouse's needs and ability to provide for the needs, and balance those against the other spouse's ability to provide support, even when the payor spouse has retired in good faith at a "normal" retirement age. See Code § 20-107.1.
22 Va. App. at 710.
The retirement issue cannot be ignored. I think Virginia recognizes a good faith "normal" retirement as a consideration in either an initial setting or a modification of spousal support.
2005 WL 4277920 at *6-*7 (emphasis added). Applying the emphasized standard to the facts before it, the court found:
Mr. Poland's decision in 1997 to enter into the lease option with IMI, liquidate Loudoun Furniture and leave the furniture business was clearly voluntary. He readily admitted it. In 1997 Mr. Poland was 60 years old. He had been in the furniture business since at least 1973. He says he retired.
After March 1997 Mr. Poland ceased to earn income from working. His income came from rent, social security and other investments. The American Heritage Dictionary defines "retire" as "to withdraw from one's occupation, business or office; stop working," and "retirement" as "withdrawal from one's occupation, business or office." I think Mr. Poland did retire from the furniture business when he entered into the lease option agreement with IMI.
Mr. Poland no longer worked after March 1997. Especially because he was 60 years old at the time I think that he made a prudent business decision in retiring as he did. It is not uncommon for persons to retire today at age 60. It was not uncommon in 1997. I find that Mr. Poland's retirement was objectively reasonable.
Even if one were to find that age 60 was not an objectively reasonable age to retire, Ms. Poland cannot complain because Mr. Poland's income in retirement did not fall below the 1995 level until 2004 when Mr. Poland was 67 years old. I don't think anyone can argue that age 67 is not beyond a normal retirement age.
2005 WL 4277920 at *7 -*8. The court specifically rejected the wife's argument that the husband was voluntarily unemployed:
It is Ms. Poland's argument that Mr. Poland is voluntarily underemployed. Under the circumstances of this case I do not agree with Ms. Poland.
Ms. Poland's argument would require any payor spouse to continue to work beyond normal and usual retirement age. Stubblebine clearly refuses to establish a bright-line rule requiring a payor spouse to forgo retirement in order to meet support obligations at a pre-retirement level.
A person can retire from one occupation and enter into another. This is not the type of retirement that would necessarily warrant a modification because such a retirement would be nothing more than a change of employment to which the rule in Antonelli would apply. But a retirement where one withdraws from his job or occupancy at a usual retirement age and thereafter lives on a pension, retirement savings, investment income or whatever other passive income the retiree has (with usually less income than when working) is the type of retirement that should be considered as a change of circumstances for support modification purposes. This latter type of retirement is exactly what Mr. Poland did.
2005 WL 4277920 at *8. The court therefore granted the husband a reduction in support.
Another trial court case is Kinsley v. Kinsley, 2005 WL 1356277 (Va. City of Richmond Cir. Ct. 2005). Kinsley was an initial spousal support case, in which Judge Randall Johnson refused to impute income to a 73-year-old retired husband. Again, Stubblebine was limited to its facts:
Ms. Kinsley argues that in spite of his retired status, Mr. Kinsley is capable of working and earning income, thus allowing permanent support. She cites Stubblebine v. Stubblebine, 22 Va. App. 703, 473 S.E.2d 72 (1996), to support her position. Mr. Kinsley argues that he is 73 years old and should not have to continue working or have income imputed to him solely to support Ms. Kinsley. The court agrees with Mr. Kinsley.
In Stubblebine, the court of appeals held that a trial court did not abuse its discretion in imputing income to a retiree. The court did not hold that income must always be imputed to retirees. The court concludes that the present case is substantially different from Stubblebine for several reasons.
First, the retiree in Stubblebine was 64 years old. Mr. Kinsley is 73. Second, the Stubblebines had been married and living together for nearly forty years, most of them during Mr. Stubblebine's army career during which Ms. Stubblebine was an "exemplary" wife and mother. 22 Va. App. at 706. While there is no evidence that Ms. Kinsley was anything other than a good wife, these parties were married and living together for less than nine years and had no children together.
Third, Mr. Stubblebine was still employed when he and his wife separated, meaning there was never a joint decision about his retirement. Mr. Kinsley had been retired for seven years before he and Ms. Kinsley separated, and there is no evidence she disagreed with his decision to retire.
Fourth, while Mr. Stubblebine was not working for compensation at the time of the trial in that case, he was working fifty or sixty hours a week "preparing for an annual conference for an organization involved in the study of parapsychology and psychic phenomena, subjects of personal interest to Stubblebine. He was also working twenty hours per week for his female friend, without pay, helping organize and manage her psychiatry practice." Id. Other than his phone card business, the income of which has already been taken into consideration in setting the amount and duration of support, Mr. Kinsley is not presently working, with or without compensation.
Fifth, Ms. Stubblebine suffered from "several chronic diseases, including arterial fibrillation, small bowel disease, and chronic shortness of breath caused by removal of part of a lung due to cancer," and was unable to work. Id. Ms. Kinsley is in good health and is gainfully employed. In short, the facts of this case bear almost no resemblance to the facts in Stubblebine. Its holding does not apply.
Neither Stubblebine nor any other case from Virginia's appellate courts sets a hard and fast rule about whether and how long a payor-spouse must forego retirement in order to pay support. In Stubblebine, the payor was 64. Would the result have been the same if he were 74, or 84, or 94? Normally, people should be allowed to retire at some point, even if they are physically able to work. Only by considering the particular facts in each case can the determination be made about whether that particular payor should be allowed to retire or have income imputed to him or her. Based on the facts of this case, the court will not require Mr. Kinsley to work or impute income to him.
2005 WL 1356277 at *7 -8. Kinsley, like Poland, was not appealed.
Summarizing the Virginia cases, there is general recognition that the court should not impute pre-retirement salary to a spouse who reasonably retires. Even Stubblebine, which eventually imputed income, imputed post-retirement income. The only cases to clearly impute pre-retirement income are Armar, where the husband retired seven years early, and Ryan, where the husband retired but went to work for another company.
The harder question is imputation of post-retirement earnings. Stubblebine imputed such earnings, relying heavily upon the husband's active post-retirement lifestyle. Geddis reached a similar result, as did the second opinion in Harber.
Indeed, when presented with a three-way choice between imputing pre-retirement income, imputing post-retirement income and imputing nothing, most of the cases opt for the middle ground of imputing post-retirement income. Only when the husband retired noticeably early has pre-retirement income been imputed. Here, if the husband presents evidence of post-retirement income, there will be very strong argument against imputing pre-retirement income.
It is much harder to predict what a court would do if the only options it is given are imputing pre-retirement income and imputing nothing. The general thrust of the Virginia cases, however, has been that the courts are reluctant to impute nothing. Some of this reluctance comes from the fact that the leading case, Stubblebine, had unusual facts and a somewhat unsympathetic husband. Yet Stubblebine was decided twenty years ago, and the reluctance of courts to impute nothing remains.
In determining whether a voluntary retirement is reasonable, the court must consider the payor's age, health, and motivation for retirement, as well as the type of work the payor performs and the age at which others engaged in that line of work normally retire. The age of sixty-five years has become the traditional and presumptive age of retirement for American workers: many pension benefits maximize at the age of sixty-five; taxpayers receive an additional federal tax credit at the age of sixty-five in recognition of the reduced income which accompanies retirement; under the Social Security Act the definition of "retirement age" includes "65 years of age"; and the Employee Retirement Income Security Act of 1974 defines "normal retirement age" as including the "time a plan participant attains age 65." Based upon this widespread acceptance of sixty-five as the normal retirement age, we find that one would have a significant burden to show that a voluntary retirement before the age of sixty-five is reasonable. Even at the age of sixty-five or later, a payor spouse should not be permitted to unilaterally choose voluntary retirement if this choice places the receiving spouse in peril of poverty. Thus, the court should consider the needs of the receiving spouse and the impact a termination or reduction of alimony would have on him or her. In assessing those needs, the court should consider any assets which the receiving spouse has accumulated or received since the final judgment as well as any income generated by those assets.
601 So.2d at 537. Pimm also held that the burden of proving changed circumstances is higher if the support award is based upon an agreement. This aspect of Pimm is inconsistent with Blackburn v. Michael, 515 S.E.2d 780 (Va. Ct. App. 1999), which reversed the trial court for applying a higher burden to modification of agreement-based spousal support. See also Pratt v. Pratt, 645 So.2d 510, 511 n.1 (Fla. 3d DCA1994) (noting that Pimm's holding on the burden of proof was reversed prospectively by an amendment to Fla. Stat. Ann. § 61.14, providing that the same standard applies to modification of agreement-based and order-based awards). Apart from the burden of proof, Pimm's recognition that payors are entitled to retire at some point is extremely helpful.
A similar result was reached by the Tennessee Supreme Court in Bogan v. Bogan, 60 S.W.3d 721 (Tenn. 2001). Bogan expressly held that retirement is unlike other forms of changed circumstances:
However, when an obligor seeks bona fide retirement, as opposed to mere willful underemployment, application of our traditional rules concerning modification of support agreements leaves much to be desired. Absent some tragedy or combination of unfortunate circumstances, retirement from further employment in the workforce is always voluntary and foreseeable because, at some point, every worker will eventually retire. Moreover, taken to its logical extreme, this standard would force an obligor to work until physically incapable of doing so merely to avoid the allegation that he or she was "voluntarily" avoiding spousal obligations. While the traditional standards regulating modification of support agreements should usually be applied to motivate parties to provide for such contingencies in their dissolution agreement, strict application of these standards in the retirement context can work unreasonable hardships. Cf. Sifers v. Sifers, 544 S.W.2d 269, 269-70 (Mo.Ct.App.1976) (denying modification when obligor "voluntarily" retired, even though he was 62, had a malignant kidney removed, and was unable to find employment in the industry in which he had worked all his life). At some point, parties must recognize that "[j]ust 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." In re Marriage of Reynolds, 63 Cal.App.4th 1373, 74 Cal.Rptr.2d 636, 640 (Ct.App.1998).
Accordingly, we hold that when an obligor's retirement is objectively reasonable, it does constitute a substantial and material change in circumstances- irrespective of whether the retirement was foreseeable or voluntary-so as to permit modification of the support obligation. However, while bona fide retirement after a lifetime spent in the labor force is somewhat of an entitlement, an obligor cannot merely utter the word "retirement" and expect an automatic finding of a substantial and material change in circumstances. Rather, the trial court should examine the totality of the circumstances surrounding the retirement to ensure that it is objectively reasonable. The burden of establishing that the retirement is objectively reasonable is on the party seeking modification of the award, cf. Seal v. Seal, 802 S.W.2d 617, 620 (Tenn.Ct.App.1990), and the trial court's determination of reasonableness will not be reversed on appeal absent an abuse of discretion, see, e.g., Crabtree, 16 S.W.3d at 360. Although we decline to confine this inquiry to consideration of a list of factors, in no case may a retirement be deemed objectively reasonable if it was primarily motivated by a desire to defeat the support award or to reduce the alimony paid to the former spouse.
60 S.W.3d at 728 -729. Again, therefore, objectively reasonable retirement was treated as a basis for modifying spousal support. On the facts, Bogan held that the husband's retirement was reasonable, where his employer had a deliberate policy of downsizing:
The first question to be resolved, therefore, is whether Mr. Bogan's retirement was objectively reasonable under the totality of the circumstances so as to constitute a substantial and material change in circumstances. We conclude that his retirement was in fact objectively reasonable. First, there is no evidence in the record that Mr. Bogan's retirement from Eastman Chemical was primarily designed or motivated to escape his spousal support obligation. Instead, as the trial court found, his retirement was due to Eastman Chemical's attempt to downsize its workforce by encouraging employees to retire, as well as his own dissatisfaction with his job. The fact that more than 2200 other Eastman employees retired during this general period, exceeding any other level of retirement during a similar period in the company's history, must weigh in favor of finding the retirement reasonable. Moreover, at the time of his retirement, Mr. Bogan had been eligible to retire with full benefits for some time prior, indicating that he did not retire as soon as possible to diminish his available income.
60 S.W.3d at 731. Most significantly, the court found the retirement reasonable even though it occurred three months before the husband's 60th birthday:
Arguing against finding a legally material change in circumstances, Ms. Bogan takes substantial issue with her former husband's age at his retirement, which was less than three weeks before his sixtieth birthday. Several states have held that age sixty-five is the presumptively reasonable age for retirement, and one state in particular has held because of "the widespread acceptance of sixty-five as the normal retirement age," an obligor that retires before that time bears "a significant burden to show that a voluntary retirement ... is reasonable." Pimm, 601 So.2d at 537. Although an obligor's retirement age may be considered in assessing the overall reasonableness of the retirement, we are reluctant to establish a presumptive age for an objectively reasonable retirement. All things being equal, an obligor who retires at an exceptionally young age will necessarily run a greater risk of being unable to establish that the retirement is objectively reasonable so as to demonstrate a substantial and material change in circumstances. However, Mr. Bogan's retirement age, while less than many but more than some, is not necessarily so young as to be unreasonable, especially given the particulars of his retirement. Accordingly, based on the totality of the circumstances as supported by the preponderance of the evidence, we conclude that Mr. Bogan's retirement was objectively reasonable so as to constitute a substantial and material change in circumstances.
Id. at 731-32. Bogan is probably the most favorable case found in the course of the present project.
The above cases all support the general notion that employment income should not be imputed after objectively reasonable retirement. It still seems likely, however, that the court must consider whether the parties' post-retirement incomes still require that support continue at a reduced level.
Amount of Reduction
Assuming that the court finds a material change in circumstances, it is not guaranteed that the court will reduce support. "The moving party in a petition for modification of support is required, therefore, to prove both  a material change in circumstances and  that such change justifies an alteration in the amount of support." Yohay v. Ryan, 4 Va. App. 559, 566, 359 S.E.2d 320, 324 (1987).
In other words, if the husband proves a material change in circumstances, the prior agreement and order are no longer res judicata as to the proper amount of support, and the court should set a new support obligation in the same way it would in an initial award case. But it is possible that an equitable amount of support might be the same as a prior obligation. This result is especially important when changes in circumstances offset each other, such as when the recipient incurs $1,000 per month in unexpected medical expenses, but also finds a new position with a salary which is $1,000 per month higher. Individually, each of these changes would justify modification; together, they offset one another and there might well be no adjustment in the amount of the award.
Considering the second prong as applied to this case, there are two points of particular concern. First, the husband can order the husband to pay support from his assets. In Driscoll v. Hunter, 59 Va. App. 22, 27, 716 S.E.2d 477, 479 (2011), the husband retired from his oral surgery practice after suffering from medical issues. But he had $3.5 million in assets, including $1.376 million in an IRA. A trial court refused to reduce the husband's $2,100 per month support obligation, and the appellate court affirmed:
Husband's premise-that spousal support should be paid exclusively from work-related income-is flawed. No special consideration is given to income from wages or a salary over income from payor's other sources. The crucial question, once a material change in circumstances has been shown, is the "ability of the supporting spouse to pay." Id. Husband's ability to pay was undisputed. The fact that the payor husband may have to draw from other sources, such as the principal of investment or savings accounts, in order to make his spousal support payment does not by itself require the trial court to suspend or reduce his spousal support obligation.
59 Va. App. at 33-34, 716 S.E.2d at 482 (2011), citing Moreno v. Moreno, 24 Va. App. 190, 195, 480 S.E.2d 792, 794-95 (1997); see also Cid v. de Cid, 1952-11-4, 2012 WL 2378347, at *2 (Va. Ct. App. June 26, 2012) (reaching a similar result; "[h]usband did not dispute that he had the continued ability to pay his spousal support obligation despite the reduction in his salary income, and no evidence was presented that wife's need for spousal support had diminished).
The Virginia cases have generally been receptive to granting a payor some reduction in support upon retirement at normal age. But the courts have been reluctant to terminate support entirely. This result is most commonly reached by imputing some form of post-retirement income. It could also be reached by holding that the recipient's increased needs offset at least part of the decrease in the payor's income.