The short answer? It depends — on whether you’re the payor or the recipient, how long alimony would be paid for, and even your age.
Before we dive into the pros and cons, let’s first define what an alimony buyout is, why it might be suggested, and when it makes sense — or doesn’t.
What Is an Alimony Buyout?
In Massachusetts, alimony (also called spousal support) is intended for a recipient in need of financial support and a payor with the ability to pay.
If it’s determined that your case qualifies for alimony, the next step is deciding how much will be paid and for how long.
In most cases — I’d say 99% in my experience — if a recipient truly needs support, alimony should be paid as a regular, consistent stream of income to cover ongoing bills and living expenses.
But in some cases, especially when alimony becomes a contentious issue, the idea of a lump-sum buyout is put on the table. The reasoning is that a one-time payment can be a lower overall cost for the payor and avoids ongoing payments — particularly appealing when there are substantial liquid assets.
Important: Any alimony buyout must be paid in cash. If the other side proposes an “offset” using home equity or retirement funds, that’s usually a bad deal for the recipient — especially if they rely on alimony for monthly expenses. You can’t pay your electric bill with home equity.
Why Would Someone Want an Alimony Buyout?
As a Certified Divorce Financial Analyst® (CDFA®), I’m often hired to calculate whether a buyout makes financial sense. In most cases, the payor — often the husband, but not always — prefers to make a clean break rather than write a monthly check for years.
There’s also a psychological factor: to some, the word “alimony” carries a negative stigma. They’d rather pay once and be done. I understand that sentiment — but if the recipient genuinely needs support, a lump sum can create long-term risks.
Why? Because instead of receiving steady, predictable payments, the recipient is now responsible for managing a large sum of money. Without careful planning, they may draw too much too quickly — and the money could run out years before it was intended to.
How Is an Alimony Buyout Calculated?
An alimony buyout calculation requires three key factors:
- The monthly or weekly alimony amount
- The total number of months the payments would last
- The discount rate (the assumed safe rate of return on the lump sum)
These are used to calculate the present value of a future stream of income — essentially answering the question:
“How much would I need to invest today, at a safe rate of return, to generate the same monthly payments for the same period?”
Example:
Let’s say alimony is $510/week or $26,520 per year, payable for 84 months. Using a 4.5% safe return rate, we calculate the lump sum that would generate $510/week for 84 months. That amount is the buyout figure or $158,991. If the alimony is much higher, say $60,000, the buyout figure jumps up to $359,708.
When an Alimony Buyout Works — and When It Doesn’t
Bad Deal for the Payor
If the buyout is paid and the recipient remarries or starts cohabiting with a significant other two years later, the payor can’t stop payments — because they’ve already been made in full.
Had alimony been paid monthly, it could have ended earlier under Massachusetts law.
Bad Deal for the Recipient
If the recipient uses the lump sum to buy a home, purchase a car, or cover other large expenses, the money may run out years ahead of schedule. If they truly needed ongoing support, they could be forced to dip into retirement savings or other assets — jeopardizing their long-term financial stability.
Bottom Line
An alimony buyout can be a clean, one-and-done solution — but it’s not without risks.
- For payors, it’s protection against years of monthly checks, but it removes the safety net of stopping payments if circumstances change.
- For recipients, it offers immediate access to funds, but it requires financial discipline and investment planning to make the money last.
Before agreeing to a buyout, run the numbers with a qualified divorce financial professional. A CDFA® can calculate the true present value and help you see the long-term impact on both sides.
