If he has the money to buy you out I would take it. One of my big regrets is that we did not have the kind of money it would have taken for ex to buy me out instead of alimony - and as a result, he has been resentful over what he was paying me (or what he mistakenly THOUGHT he was paying me) and so stuck me with every other expense for our adult children that he could weasel out of.

I often think that if it had been settled at the time of the divorce, we would be on much friendlier terms now.

So - things to think about in the buyout:

- how long an alimony would you likely qualify for if you went to court, given your ages and length of marriage?
- It was my understanding that at least in my state, alimony could ALWAYS be revisited - that is, if my ex became disabled or was fired or something, he could always go back to court and get the alimony changed. So having a bird in the hand is better than a possibility of future income that may or may not come true.
- He should not have cancelled the insurance, I suspect the court would have something to say about that. In my divorce my ex had to let me maintain insurance on him in case he died before paying me all the alimony he owed. (He did however insist I reduce it from the $500k policy we already owned to a $250k policy - lol, he didn't want me to have an "incentive" to have someone rub him out!!!!!!)
- the buyout should be based on his imputed income and yours, not on his retirement "non-income"
- the buyout is calculated taking taxes into account. So, for instance, let's say alimony was going to be $25k for 10 years. That would have been tax deductible to him, so if he's going to be in a high tax bracket (say his top rate is close to 50% between state and federal), it would only have cost him say $13k/year. You on the other hand have to pay taxes on alimony, so assuming your top combined tax bracket turns out to be 30%, you would possibly only net $17,500 a year. Times ten years that would be $175,000 total BUT they also calculate in the interest you could make investing that lump sum. Assumptions here make a big difference - for instance, assuming that you will put it in a mutual fund and it will make 7% a year is a very very bad assumption. But they will probably want to use something overly optimistic like this. You on the other hand might want to use something very pessimistic, like current bond or CD interest rates which are quite low. The truth is probably somewhere in the middle. A quick rough calculation using the Financial Mentor ultimate retirement calculator online (a handy easy tool which lets you change a lot of assumptions - although in this case I'm missing the relatively small amount of taxes you might pay on your investment income) shows that for ten years of alimony at a take home of 17,500, he would need to give you a lump sum of around $171k and change if we assume a 2% interest rate on that investment. If we assume a 7% interest rate, he only needs to pay you $131k. (this assumes that the lump sum he is giving you is marital assets that you do not have to pay taxes on).

Now - if you're in a position to use the money to pay off a mortgage on a home for yourself (that is, you can earn enough income to cover your other expenses until retirement) then you can actually make a guaranteed 4% on that money (or whatever your mortgage interest is.) There are arguments for and against paying off your mortgage this way, depending on your situation.

If you opt for the alimony route instead, then he HAS to allow you to keep an insurance policy on him, and I would fight to make him pay you the difference between the cost of a new policy and the (probably cheaper) cost of the old policy. Also insist on an automatic withdrawal.

Also, bear in mind, if some of the money that he is going to use to buy you out is in a 401k or some such, you will have to pay taxes on it when it comes out, just as you would on the alimony. In that case, you would need $187 k if assuming 7% annual growth of investment, or $244k if assuming a safe 2% growth rate. (If you use 4%, you would need a lump sum of $219k).

Odds are, if he hears the actual figures, he will want to pay you alimony instead as it's a better deal for him (and hope that you drop dead or he truly retires before he's done paying it all). So you will have to consider how much is it worth to you to negotiate, in order to have the bird in the hand.