We hear a lot of warnings from experts about the dangers of not saving for retirement.
What isn’t spoken about often enough is what can go wrong even if you think you’re doing everything right.
We tend to anticipate the usual risks – volatile markets, poor returns and stagnant economies – when in reality, the greatest risks to your retirement plan are often things that happen in everyday life.
Moneyweb looked into some of the seemingly innocuous things that could put a serious damper on your golden years.
Divorce
If you’ve made it to your 40s or 50s without getting divorced, you probably think that you’re in it until ‘death do you part’. Statistics suggest that that isn’t necessarily the case.
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 on 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.
Unless you’re wealthy, both parties would need to be prepared to compromise on lifestyle.
Second Homes
While both spouses are still working, a second home can seem like a good investment.
While one’s children are at school, a second home is often the family’s holiday hub and a vacation bastion for friends and extended family. 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 cashflow. Being forced to sell a second property at an inopportune time can result in your nest egg being compromised.
Not ideal.
Adult Children
If your adult children are still living at home, they could be a serious drain on your retirement funds. If not, they could still impact your plans.
One of the single biggest threats to a couple’s retirement funding is adult children who continually ask to borrow money from their parent’s 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 parent’s dwindling resources.
Teach your kids good habits when it comes to managing their finances by partnering with an expert who can help you and your family protect and build your wealth.
Starting a Business
Once you’ve retired, you might be tempted to start a side-hustle.
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.
Consider other means of scratching the entrepreneurial itch that doesn’t eat up your assets.
The easiest and safest way to ensure that you retire in style is to get an expert involved in your planning and decision making.
Consequence Private Wealth believes that “the consequences of decisions made today will unfold over a lifetime based on the sound principles applied at their inception”.
Think of it as having someone in your corner who can guide you through the twists and turns that you’ll encounter along the way to living your best life after retirement.
[source:moneyweb]
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