Some of the biggest commonplace threats to your retirement plans

Even the most bulletproof retirement plan can be disrupted by innocuous reasons such as the following:

Divorce

Although most couples in their 40s and 50s probably don’t anticipate divorce, the numbers are somewhat unnerving. Regardless of the scale of a couple’s wealth or the amiability of the separation, a divorce can have catastrophic effects on one’s retirement planning; and any couple would be naive to believe they can unravel their marriage without severely compromising their retirement plans in the process.

A divorce later in life is bound to not only disrupt one’s financial independence, but also force a number of lifestyle changes to be made by both parties.

What was once a jointly conceived retirement plan comprising of a single retirement home, mutual travel plans, appropriately timed vehicle upgrades and a retirement income sufficient to support a combined lifestyle would need to be cast aside and recalculated for each individual.

Second homes

Buying a second home while both spouses are still working may often seem both affordable and practical, especially if the bond on the primary residence has been settled. The thrill of owning a second home is, however, often replaced by anxiety once the reality of funding a second home from a reduced retirement income sets in.

Added to the financial pressure of financing the second home, the upkeep of the second property often becomes an arduous duty rather than a weekend pleasure.

In addition, if the equity in the second home is needed to supplement other retirement investments, the timing of the sale of a second home can be instrumental to secure one’s retirement cash flow.

Being forced to sell a second property at an inopportune time can result in your nest egg being compromised.

Adult children

One of the single biggest threats to a couple’s retirement funding is adult children who continually ask to borrow money from their parents’ nest egg.

Helping one’s adult children with the purchase of their first property or assisting them financially when embarking on a new business venture is something that many parents do as a means of assisting their child gain a stronger financial footing.

The problem, however, arises when financial assistance happens so often that it becomes a form of annuity income for the adult child who, in most instances, is completely oblivious to his or her parents’ dwindling resources.

Starting a business

Retirees with an entrepreneurial itch often find the temptation to start a business irresistible, but doing so can dig dangerously into much-needed retirement capital.

As enticing as it may be to start a new business venture or try one’s hand at innovation, the truth is that very few earn what they would have earned if they’d simply kept their funds invested.

It would be wiser to consider alternative outlets to channel one’s entrepreneurial energies rather than disinvesting one’s lifetime assets in the hopes of satisfying an entrepreneurial whim. v Craig Torr is founding director of Crue Invest

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