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Handling a larger divorce settlement: May and June's story Add to ...

These two sisters got divorced about the same time. May got more in her settlement, but June came out ahead in the end. Why?

May’s divorce settlement from her former spouse included:

  • $25,000 in spousal support for five years
  • $75,000 from her Registered Retirement Savings Plan (RRSP)
  • The family home, fully paid for.

May wasn’t used to living on a smaller income. In five years, she had spent all her savings. Without the spousal support, she now had no income and no job. She only had the house left, and she couldn’t afford to keep it.

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June’s settlement from her ex-spouse included:

  • $25,000 in spousal support for five years
  • $35,000 in RRSP savings
  • The family home, with a mortgage of $1,200 a month.

June used her spousal support to go back to school. To make ends meet, she put herself on a strict budget, so she wouldn’t have to dip into her RRSP savings. When she graduated, June got a full-time job that gave her more income. After five years, she had grown her retirement savings to $50,000 and had the same lifestyle she enjoyed before her divorce.

Lesson learned: Even if you get a larger divorce settlement, be careful about spending your money too quickly. Plan for the long-term future so you can live comfortably for years to come.

Content in this section is provided in partnership with Investor Education Fund, a non-profit organization founded and supported by the Ontario Securities Commission that provides unbiased and independent financial tools to help Canadians make better money decisions. To find out more, go to: GetSmarterAboutMoney.ca

 

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