In our country, over 4,000 people get divorced every day. Some do so after many years of marriage and in the context of very unequal spousal incomes. Such divorces often require alimony payments to reach a fair settlement. The question is how much maintenance should be paid and for how long. Economics and advanced software can help answer these questions.
Consider a hypothetical couple – Dianne and Tony, aged 45 and 52 respectively. The two separate after 20 years of marriage. The childless couple, based in Massachusetts, are selling their current $2 million home, dividing the proceeds and moving into two $500,000 condos. They have $500,000 in their savings account and Tony has $1.5 million in his 401(k). Both want to retire at 65.
Tony and Dianne decide to split all assets 50/50. But the two have very different earnings. Dianne withdraws $25,000 a year. Tony, a top cardiologist, withdraws $750,000 annually. He will also receive higher Social Security benefits. The couple agree that in the future they should both enjoy the same standard of living. To calculate the alimony required, I ran it through my company’s AMDS (Analyze My Divorce Settlement) software. After a few iterations, I ended up with $251,780 in today’s dollars per year until Tony retires. This amount allows both spouses to spend the same amount annually until age 100 (if they live that long) and still meet all of their Medicare Part B tax, housing, and future premium obligations.
How does $251,780 compare to the alimony generated by the Massachusetts online calculator? It’s at the high end of the calculator’s range, which is $217,500 and $253,708, or 30 to 35% of the difference between Tony’s and Dianne’s annual income. There is $34,280 between the AMDS recommended $251,780 and the lower end of the mass subsistence range, which is $217,500. That’s a big difference.
It’s hard to imagine how Tony and Dianne would have ended up with $251,780 without AMDS. There are just too many complex interconnected parts to calculate and the calculation needs to be done just right. If Tony and Dianne asked their financial planner or attorney to make the call, they would be equally at sea. And if they ended up fighting and asking a judge to rule the number, the judge would be just as clueless. Still, judges make calls like this every day across the country.
Note that Dianne and Tony might end up fighting over the right amount of child support even though they share the same goal, which is to have the same sustainable standard of living. If the argument got nasty, it could easily escalate into a large argument that cost a small fortune in legal fees. To avoid such costly fights, I developed AMDS. Why let people fight when a software tool can resolve contentious issues in literally seconds?
Given that Tony makes so much money, the couple could opt for the Mass Alimone policy cap of $253,708. That’s pretty close to the correct number. But suppose the couple lived in Ohio, where the benchmark is $122,740. How are they supposed to know that’s not enough? You would not. And they wouldn’t necessarily just use the $122,740 figure, knowing that a guideline is just a guideline and that judges will agree to any reasonable settlement they agree to.
The table below shows the breakdown of child support payments by state for the 13 states that I was able to find child support calculators for. Amounts vary from $60,000 in Texas to $362,500 in Vermont. That’s a huge spread. Its size tells us that upkeep policies really don’t make sense.
What about the 38 other states and Washington, DC that don’t seem to have calculators? Here the couple has to decide if they can decide and the judge decides if the couple can’t. Even in states that have clear policies, those policies are not set in stone. Every state gives its judges leeway to set child support payments based on a long list of factors.
Here is my bottom line. Child support decisions are usually for child support payments. Do not assume that anyone or any rule of thumb established by a state legislature can provide you with accurate guidance. Decide with your spouse what percentage difference, including zero, is appropriate in relation to your sustainable standard of living. Then use advanced software to determine the amount of child support that creates that difference.
| Status | Annual maintenance payment Policy ($) |
Payment period (years) |
| Arizona | 217,500 | 6-10 |
| California | 227,401 | 10 |
| Colorado | 285,000 | 10 |
| Kansas | 138,750 | 6.67 |
| Massachusetts | 217,500-253,750 | 16 |
| New Jersey | 265,586 | ARE NOT |
| New Mexico | 212,500 | ARE NOT |
| North Carolina | 233,333 | ARE NOT |
| Pennsylvania | 152,250 | ARE NOT |
| Texas | 60,000 | 7 years |
| Vermont | 217,500-362,500 | 9-20+ |
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