Evan Simonoff noted in Financial Advisor Magazine this month, investment performance or lack thereof, is the reason most folks say they fail at retirement—but that’s rarely the true cause.
As one of your trusted advisors, we can’t forcefully control financial markets, or your savings and spending habits, much less the interpersonal dynamics of your lives. But we can make you aware of the numerous pitfalls you face when your life faces the radical transformation to a post-work era.
Let’s take divorce. The divorce rate among Americans over 50 has been rising for several decades, doubling between 1990 and 2010 and according to a Bowling Green University study, one in four divorces today occurs among couples over 50.
What’s more, researchers find the rate of divorce is 2.5 times higher among couples who are remarried. As life expectancies increase, Simonoff argues the trend is likely to continue. Why? Children have grown up and are no longer around to make an extremely busy lifestyle and even to mask dysfunctional relationships.
Boomers in search of meaning tell themselves “there has to be more to life than this.” Over time, many people simply change and grow apart.
And even though most of you have substantial net worth, when your assets are split 50/50 and living expenses are increased, it’s no longer the cruise either spouse signed up for.
Like so many challenges that surface in retirement, divorce is often symptomatic of two people finding it difficult to make a major lifestyle transition together. “It can be his vision versus her vision,” says Mitch Anthony, author of The New Retirementality.
Both couples and individuals need to find a balance between vocation and vacation (places and amount to spend - and even how often), personal renewal and connecting with others. “Couples may agree on two of the four so they need to resolve the other two,” Anthony says.
Many of my clients who have recently divorced have to do extra work on their budgets to ensure they are not spending more than they should (so they don't outlive their savings).
Having long term care and other insurance to help pay for emergencies and a long endured illness is paramount. They also have gone through the process of establishing new beneficiaries on all paperwork (usually to their children, and sometimes a charity) since most things will have had the spouses name as the primary beneficiary.
Conclusion:
Divorce is rarely a topic married couples—particularly those in their pre-retirement years--want to broach when they meet with financial advisors. But, by putting it on the table preemptively, and taking steps to address that “what if” possibility, can prevent you and your spouse (or 2nd spouse) from allowing it to irreparably disrupt your financial independence in retirement.
Next week, we’ll talk about preparing for other traumatic life events and how to lessen their disruption of your golden years.
Next week, we’ll talk about preparing for other traumatic life events and how to lessen their disruption of your golden years.
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