This woman’s $16,000-a-month in spousal support ends at 65. She will need to make deep cuts to survive

Situation: Woman with spousal and child support ending at 65 can’t sustain way of life after that

Solution: Cut expenses now, sell house, buy condo, invest difference and raise future income

A woman we’ll call Jackie, 52, lives in a village in Ontario. An owner of a small business specializing in athletic gear, she has two children ages 18 and 14. Single after an amicable separation, she has a complex monthly gross income that includes $2,575 of business revenue, $3,197 of child support and $13,234 of spousal support. In all, her gross income is about $19,000 a month and, after tax, she takes home about $13,600 each month. In retirement she won’t be able to maintain her comfortable way of life. Payments from her ex will become a flat $12,000 per month when the kids no longer need child support, but end completely at 65, when she will be entirely on her own financially. The bad news is that cuts will have to be deep. The good news is that she has plenty of time to prepare.

Currently, there are hefty expenses for raising two teens. Each month, on top of her monthly $1,436 mortgage payment, she spends $1,570 for food and household supplies, $600 for restaurants, $1,349 for car lease and gas, $1,700 for clothes and grooming, $695 for yard and home care and $450 for the younger child now in her first year of private school. The is also a big charge for cellphones in her $850 expenditure on utilities and internet.

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Family Finance put Jackie’s situation to Derek Moran, head of Smarter Financial Planning Ltd. in Kelowna, B.C. This is not a superficial makeover — it has to be fundamental and it is a matter of survival. “In retirement, Jackie wants a way of life which, with present numbers, she will not be able to maintain,” he explains.

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