Financial advisors can spend decades working with clients to craft a retirement plan that, on the surface, appears bulletproof from the standpoint of investments, retirement income and asset-liability management only to see it fall apart in short order. The fact is it happens a lot more frequently than many advisors want to admit.

Reality is that advisors don’t control financial markets, or clients’ savings and spending habits, much less the interpersonal dynamics of individuals’ lives. So all advisors can do is help make clients aware of the numerous pitfalls they face when their life faces the radical transformation to a post-work era.

Honest conversations about why clients fail in retirement aren’t always comfortable. But it is one that Greg Sullivan, CEO of Sullivan, Bruyette, Speros & Blayney, has with prospects even before they become clients.

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.

The first topic Sullivan raises with prospects is divorce. That’s not a pleasant thing to tell a couple in their 40s or 50s whom you’ve met once and hope will pay you fees for decades to come.

Sullivan does it in a way that lets the prospect know he isn’t making any judgment about their marriage. “I just put it on the table,” he says. “If it happens, it will disrupt your financial independence and change your lifestyle.”

The reality is that divorce among Americans over 50 years old has been rising for several decades, doubling between 1990 and 2010. According to an article dubbed “The Gray Divorce Revolution” by Bowling Green University sociologists Susan Brown and I-Fen Lin, roughly one in four divorces in 2010 occurred among couples over 50.

One conclusion of their article was that one divorce tends to breed more divorces. Why? Because the rate of divorce is 2.5 times higher among remarried couples.

As life expectancies increase, the trend is likely to continue. The explanations vary. Children have grown up and are no longer around to mask
dysfunctional relationships. Baby 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.

Sullivan’s clients typically have $3 million to $4 million in assets, placing them near the upper end of America’s mass affluent. That’s enough for a comfortable retirement in most people’s book, but when the assets are split along 50/50 lines 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 and a columnist for Financial Advisor.

Both couples and individuals need to find a balance between vocation and vacation, personal renewal and connecting with others. “Couples may agree on two of the four so they need to resolve the other two,” Anthony says.