June 9, 2015

A recent survey conducted by Evan Simonoff uncovered the top reasons why retirement plans which appear to be "bulletproof" from an investment perspective fall apart. It may come as a surprise to you, but none of these reasons have to do with macro forces such as market performance or a poor economy.

In fact, the top reasons are centered around personal life choices that sometimes create unfavorable effects on the financial health and achievability of a retirement plan.

  1. Divorce- according to a study published in the 2012 Journals of Gerontology the rate of divorce among people 50 and over increased to 10.05 per 1,000 in 2010 from 4.87 in 1990. While divorce is quite disruptive the more time you have to plan and the more open you are with your advisor about the situation the better.
  2. Second Homes-when purchasing a second or even third home in retirement, even if the first is paid off, your cash flows are still the same. The maintenance and expense of additional property puts a heavier strain on your cash. This can be avoided by discussing your retirement goals far in advance and giving your investments enough time to grow and accommodate your desired lifestyle.
  3. Starting a Business- many retired executives have "irresistible temptations to start a business". But this can greatly affect capital and the ability to let the portfolios grow at the rate needed to sustain your retirement lifestyle if cash is continually taken out.
  4. Adult Children- this increasingly becomes an issue when a son or daughter goes through a rough patch and becomes reliant on the parental income indefinitely. While a parent should not ever be told how to parent their children-this kind of support ultimately drains assets that cannot grow fast enough to keep up with the pace of spending.
The opportunity here is not to look at these four topics with a dreadful knot in your stomach. Rather it is to realize that in each of these scenarios there is a chance to make adjustments, recalibrate, and set a new course of action that accommodates your lifestyle in retirement. And one thing is certain; you will need the support of a financial professional and their objective perspective. Understanding that change is constant, making life unpredictable; take the opportunity with your eyes wide open and make sure you live this one life you have the best way possible.

Caroline Hill, Financial Advisor

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(This article contains the current opinions of the author but not necessarily those of Brighton Securities Corp. The author's opinions are subject to change without notice. This blog post is for informational purposes only. Forecasts, estimates, and certain information contained herein should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. References to specific securities and their issuers are for illustrative purposes only and are not intended and should not be interpreted as recommendations to purchase or sell such securities).