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The New Florida Alimony Bill - Can the Wife Save for Her Retirement?

There's a new Florida alimony bill under consideration in the state legislature. I sent these comments:

If you change one part of an equation, that changes other parts of the equation. Before addressing changes in the alimony law, one must look at other aspects of family law, more particularly the law regarding modification and the law which prohibits savings alimony as a component in determining the needs of the recipient.

There are wives who pay alimony to their husbands, but for purposes of this discussion, I will assume the husband is the one paying the alimony.

Please keep in mind the following basic principles:

1. Whereas the distribution of assets is an entitlement theory based upon the fact that marriage is considered a partnership, alimony is based upon need and the ability to pay.

2. We have equitable distribution in Florida which means each party is entitled to an equitable or fair share of the martial assets. Not all assets are marital, and some assets have both a marital and non-marital component. Once it is determined what is marital, the division may or may not be 50/50. In a Community Property state, once it is determined what is in the Community, the division would automatically be equal.

3. In determining what the wife needs, all of her expenses are considered, but what cannot be considered as a matter of law is her need to SAVE for when her husband retires.

4. Alimony awarded by the court is modifiable based upon a material change of circumstances. If the parties settle by entering into a Marital Settlement Agreement (MSA), it is possible to provide that the alimony is non-modifiable, or only modifiable upon certain specific circumstances. In other words, the MSA can provide that the alimony is only modifiable based upon the wife’s increased needs but cannot be modified because the husband earns more money or inherits a substantial sum.

I understand the issue about retirement. It is certainly reasonable to have a body of law that does not require the payor to continue to work because of this obligation to pay alimony. However, there is the other side of the coin that must be considered. What about the payee? How does she live once her former husband is retired and no longer is paying her any alimony, or only paying a lesser amount of alimony? She must have the money she needs saved, but therein lies the rub.

Take the following scenario which is not uncommon. The husband is the sole or major wage earner. The parties live in an expensive house with their children. Normally, both parents will want the children not to be uprooted, at least for some time. There has already been enough turmoil in their lives due to their parents being divorced.

The husband can afford to support the family and, let’s say, just picking a number, that he pays $15,000 a month. Maybe the wife earns a little something, but she is, by the choice of the parties, a homemaker. Assume further that the wife’s total need is $22,500 a month, but those needs are met by using the passive income she earns on her equitable distribution, the assets she got, and by her part-time work. All of this is fine until the husband wants to retire or until he remarries and his second wife starts complaining about all the money he is paying his first wife.

What is essential to keep in mind is that when determining the wife’s needs, the law does not allow one of those needs to be saving money. Her reasonable, necessary, and customary living expenses are legitimate needs but not the need to save.

So the wife, who is not stupid, thinks, “How can I make sure I am all right once my ‘ex’ retires, or maybe can no longer afford to pay what he initially agreed to pay?” Once the children are out of the house, or maybe even earlier, she can try to get a job or go back to school and hope that when she finishes someone will employ her. Those are, in my view, problematic options, but what is more problematic is that she can downsize by selling the expensive home and moving to something much less expensive to put away the money she saves so she can live when her husband no longer supports her with alimony.

Now the problem is that as soon as she either goes to work or downsizes, the husband runs into court and moves to modify downward his alimony obligation because the wife’s present needs have been reduced. That is simply not fair. If the law regarding alimony is to change, then the law has to change with respect to modification and making savings a need to be considered at the time the original alimony is set.

As Sinatra sang in Love and Marriage, “you can’t have one without the other”.

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