Evan Simonoff has an interesting article in Financial Advisor Magazine entitled “Why Clients Fail At Retirement .” He writes:

If an advisor asks a client or prospect why they think most mass affluent Americans fail in retirement, Sullivan finds they’ll typically say it is investment performance. In 34 years as a financial advisor, he has seen many people flunk retirement, but investment performance has never been the cause.

So what are the reasons well-off clients lose financial independence after entering their golden years? Sullivan likes to tell them “it’s the things you own or maintain responsibility for that are over 50 pounds that constantly need to be fed.”

Cats and dogs of reasonable size are fine. It’s the adult children and big animals that Sullivan cites as cash drains. His home state of Virginia is populated with horse farms. “Horses are worse than kids,” Sullivan quips.

Living in Virginia, I understand the quip about horses. Horses and boats are two of the most expensive items to maintain.

Here are the 7 reasons given in the article that your retirement might fail:

1. Divorce
2. Second Homes
3. Adult Children With No Shame
4. Starting A Business
5. Health Care
6. Overspending Assets
7. Swindled By Elder Fraud

Each of these seven concerns deserves its own article on what you can do to help prevent it from jeopardizing your retirement. But you can do something about all of these.

Investment performance isn’t something that you can do much about. In the short term stocks are inherently volatile, but in the long term they are inherently profitable. For planning purposes, we only count on receiving returns that are 3% over inflation. Since annual inflation is only 0.2%, that means your annual investment returns only need to be 3.2% for the retirement projections we use to succeed.

Perhaps the principle summarizing what can be done about all seven of these retirement worries is this: Know your safe withdrawal rates and live well within your means.

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