The obligation to pay spousal support does not necessarily end, and support may not be reduced when a payor decides to retire. If an order to pay support does not include a termination date, then a “material change in circumstances” is needed to vary the spousal support terms.
A payor’s retirement and a corresponding decrease in income can amount to a material change justifying the variation of support. However, courts will consider the motivation for retirement and whether it is reasonable given its financial impact on the recipient, especially since spousal support can be grounded in the other spouse’s economic needs and relieve economic hardship.
One recent case dealt with this scenario and demonstrated how the courts imposed a transitional support period before termination.
Material Change Required to Vary Support
In Starra v. Starra, the parties were married for 25 years but separated in 2007. Spousal support was resolved in 2013 with a Final Order in which the husband paid the wife support of $15,500.00 per month. Now, the parties had reached the age of 63 and 62, and the husband sought to retire and wished to terminate spousal support. The wife also wanted to readjust support due to her declining health. Section 17(1) of the Divorce Act enables courts to vary, suspend, or rescind any provision of a support order. However, the Act first requires that there has been a “change in the condition, means, needs or other circumstances of either former spouse.” As the Supreme Court of Canada explained in Willick v. Willick, courts must determine if “the conditions for variation exist” and that “the change must be a material change of circumstances.”
The 2013 Final Order provided ongoing spousal support without a termination date. Now, facing a variation of the spousal support order, the judge concluded that the wife’s support entitlement was based on compensatory and non-compensatory support. The wife had given up career opportunities to care for the parties’ children during the marriage, she lacked income, and she also had ongoing health conditions. There were also psychological issues that meant that she was unable to work. Additionally, the wife’s health issues regularly required medication, and those expenses had significantly increased to an estimated cost of $45,000.00 in 2024.
No Fixed Rule on When Retirement Warrants Terminating Support
In Haworth v. Howarth, it was found that a payor’s substantial decrease in income would meet the threshold for a variation since a prior order “contemplated a salary level far exceeding what the payor would receive in retirement.” The husband argued that his retirement and decrease in income constituted a material change in circumstances. The wife did not challenge the husband’s claim but sought adjustments to spousal support based on a proper income valuation. Based on the husband’s personal circumstances, the judge found his choice to retire was reasonable and was not based on an attempt to avoid paying spousal support. Justice Desormeau was satisfied that the financial impact of retirement constituted a material change in circumstances.
St-Jean v. Fridgen set out various factors that courts can consider when determining whether a support payor can reduce or terminate support upon retirement. However, the judge also indicated that “there is no hard and fast rule to be applied in every case about when or at what particular age a support payor is entitled to retire and seek a reduction or termination of spousal support.” Ultimately, the facts of each case must be considered. Section 17(7) of the Act requires any variation to:
- recognize any economic advantages or disadvantages to the former spouses arising from the marriage or its breakdown;
- apportion between the former spouses any financial consequences arising from the care of any child of the marriage over and above any obligation for the support of any child of the marriage;
- relieve any economic hardship of the former spouses arising from the breakdown of the marriage, and
- in so far as practicable, promote the economic self-sufficiency of each former spouse within a reasonable period of time.
Considering those objectives, Justice Desormeau had to determine whether the husband’s support payment should be terminated, reduced, or continued after his retirement. The evidence indicated that the husband had paid over $2.1 million of spousal support since the 2013 order. The judge found that it would be appropriate for spousal support payments to be reduced through a transition period before terminating. This was because the wife’s original compensatory and needs-based entitlement to support continued to exist for a time, regardless of the husband’s retirement. The compensatory basis included the fact that there was a traditional marriage where the wife gave up her career to raise children while the husband was the main financial provider.
Additionally, the wife’s health issues prevented her from obtaining employment. In Schulstad v. Schulstad, the court noted that “need is measured against the parties’ marital standard of living”. The Spousal Support Advisory Guidelines state that where a recipient has limited earning capacity, the recipient’s needs may require an award at a higher amount or longer duration.
Judge Sets a Transitional Period of Support
The husband argued that courts may attribute income to a party when they have not reasonably used their financial resources. In contrast, the wife argued that she had been unable to become economically self-sufficient. In Boston v. Boston, the Supreme Court of Canada explained that under a compensatory support order, recipients are obligated to use property that the parties have equalized “in an income-producing way” to provide for their future support. Similarly, in the Spousal Support Advisory Guidelines: The Revised User’s Guide, the authors explain that individuals may need to live off their capital as they age. The judge accepted that both parties “have the obligation to draw down on their respective capital resources to address their needs.”
It was also necessary to consider the husband’s ability to pay, given that his income was to decrease when he retired. While the wife argued the husband had additional sources of income, apart from making some minor adjustments, the judge was not persuaded that additional income should be imputed. At the time of the 2013 final order, the husband’s income was approximately $425,284, but his situation was now different. Both parties agreed that, at that time, the order reflected support set at the mid-range. Now, the wife argued the range should be shifted to high-range support due to her compensatory entitlement and needs. However, the judge disagreed on what would be appropriate. Although the costs for managing the wife’s health needs had increased, the judge determined this was largely due to the treatment plan she chose to follow. It was also notable that the parties’ net worths were very similar. Justice Desormeau found the wife was entitled to compensation for an additional two-year transition period. After that, the husband would be 66 years old and the wife 65, and at that point, the objectives of spousal support would have been met.
Support Obligations Should be Considered Before Retirement
Even if a support payor’s retirement is reasonable, it does not mean a support obligation will automatically end. The quantum and duration of support are determined considering the objectives set out in the Divorce Act, though each case depends on the parties’ specific financial history and will turn on the individual facts.
Windsor Family Lawyers Helping Clients Navigate Issues Of Spousal Support And Retirement
Understanding the factors judges consider, such as the payor’s motivation for retirement, the recipient’s needs, and the principles of spousal support, is crucial. If you are a payor or recipient of spousal support and are contemplating retirement, it is essential to seek legal advice to understand your rights and obligations. Johnson Miller Family Lawyers in Windsor are experienced family law lawyers who can advise you on what you need to know about your spousal support obligations. Contact our experienced family law team today by calling 519.973.1500 or contact us online for a confidential consultation to discuss your situation and explore your options.