Can we talk about what I think is a blind spot in our retirement planning?

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Willmunny
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Can we talk about what I think is a blind spot in our retirement planning?

Post by Willmunny »

I am afraid this post may rub some people the wrong way. It is not intended to be controversial for the sake of controversy. But in lurking at this forum for years before posting, and reading and posting intermittently for the last few years, I have for some time believed there is one large blind spot in the financial/retirement plans of many Bogleheads forum posters (as well those who respond to such posts). That is the statistical chance of a divorce.

There is vigorous debate on, for example, whether a safe withdrawal rate should be adjusted by a few tenths of a percent based on various historical modeling and projection software such as Firecalc. We debate whether our bond allocation should include ibonds vs. BND vs. treasuries, etc. So we plan and worry about things that could, but very likely will not, make a material difference to our outcomes. We sweat the small stuff. I am not saying that is without merit. I want to optimize my portfolio and safe withdrawal rate as much as the next person, so I am very interested in such discussion.

But there are many posts from one person of a married couple that, for example, project whether they can retire and seek advice on such projections. Some of these posters are rather young (particularly given the FIRE movement), relatively speaking. Most of these posts do not even appear to take into account the possibility of divorce. The responses to those posts do not appear to do so either. These posts are framed in terms of "our assets" and "our annual spending." But statistics show that there is a, what I view as material, chance that "our assets" can turn into "my assets" and "your assets" later in life (even during retirement).

Admittedly, everyone's situation is different. This is probably a very tiny risk for people such as, for example, my parents, who are older and have been married for 50+ years. I would be more surprised about a divorce there than I would by someone I know being struck by lightening. So, while not impossible, I think, based on my great familiarity with them as people and their marriage, it likely doesn't make too much sense for them to worry about such a remote contingency at this stage in life. But for people in the accumulation phase that don't have 50, or even 25, years of marriage under their belts, I think the statistics show that the chances of a divorce later in life are not immaterial. And the consequences can change our financial outcomes drastically.

So my question is, while everyone's situation is different, shouldn't many (even those who are currently happily married) consider the possibility of divorce and whether the portfolio would be sufficient to sustain spending levels of each spouse living in different households? Again, every situation is different, and I am not saying considering such a possibility should move the "can we retire" needle in every situation. But for as much as we plan for various contingencies that may have a relatively low likelihood of impacting our standards of living in retirement, for many of us, this does seem to be a more material threat than, for example, whether Firecalc says husband and wife have a 3% chance of failure and how we can get that down to a 2% or less chance.

Here is a short quote from an article I ran across, written last year, with respect to divorce statistics among older people (link to full article also included below):

"Gray Divorce

Though there’s a decline in overall divorce rate, “gray divorces” are on the rise among older people between 50 and 65. The usual assumption that major life transitions like an “empty nest” or retirement fuel gray divorces have no strong correlation. Instead, the same reasons found in most divorces in younger people—quality of marriage—is also salient for older couples.

The divorce rate for people aged 50 and above has doubled since the 1990s. For people aged 65 and above, the rate has tripled.
About 1% of married Americans over age 50 get divorced each year.
55% of gray divorces involve couples who have been married for 20 years.
"

https://comparecamp.com/divorce-statistics/

I do believe this is actionable in the sense that I think it makes sense for many or most of us to at least give thought to this possibility when planning for retirement. Whether it moves the needle will be based on individual circumstances and risk tolerances, but I think we need to at least acknowledge that this risk exists, assess this risk based on our own life circumstances, and, like other risks we assess (e.g. the chances that we may need expensive long term care in retirement), face it head on, rather than ignore it (as I fear many of us do).
H-Town
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Re: Can we talk about what I think is a blind spot in our retirement planning?

Post by H-Town »

This is why we plan 50x for our FI goal. If a divorce happens, each of us still have 25x without changing our annual expense. It's not that we anticipate a divorce, but we make sure that finance won't be the reason why choose to stay together or divorce.

Since both of us are high-income professionals, it works out well for our planning.
Normchad
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Re: Can we talk about what I think is a blind spot in our retirement planning?

Post by Normchad »

You’re not wrong.

A divorce would certainly throw a huge monkey wrench is most people’s plans. It’s unpleasant to think about.

But maybe, it’s not worth thinking about that much anyway. For me, a divorce would change absolutely everything. I’d have to completely start over with all my planning. I don’t know if I could conceive of a single “unified plan” that accounted for either staying married, or getting divorced. It might be more akin to the zombie apocalypse; I don’t think it’s going to happen, but if it does, then everything is out the window.
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TomatoTomahto
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Re: Can we talk about what I think is a blind spot in our retirement planning?

Post by TomatoTomahto »

Thank you for starting this thread. My wife and I have a strong marriage, and I’m 70. I think divorce is unlikely, but far from a 0% chance.

I have been previously divorced, and the financial impact was staggering.
I get the FI part but not the RE part of FIRE.
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SquawkIdent
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Re: Can we talk about what I think is a blind spot in our retirement planning?

Post by SquawkIdent »

This can and does happen more frequently than I think people realize. Gray divorces do happen.

I’ll be careful about what I say here but it is unfortunately a reality at anytime. Retirement doesn’t make you safe from it. Sometimes it actually causes it.
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Re: Can we talk about what I think is a blind spot in our retirement planning?

Post by michoco911 »

Well i treat this very easily.
I am hoping for a portfolio that would generate 10K$ per month to spend it with my wife on travels, hotels and other activities.
In case of divorce (highly unlikely) i guess a 5K$ per month would be fine for me to enjoy the same activities alone :)
We should not overthink these stuff. Live the moment and enjoy it while preparing for a wealthy and decent retirement through consistent investments.
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Re: Can we talk about what I think is a blind spot in our retirement planning?

Post by qwertyjazz »

https://livingafi.com/2021/03/17/the-20 ... more-15998

Probably the best financial independence retire early blog. His update where he gets divorced, has medical problems and goes back to work.
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Kagord
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Re: Can we talk about what I think is a blind spot in our retirement planning?

Post by Kagord »

That's why I always recommend buying divorce insurance, there's nothing that brings stability to a marriage more than knowing that you're in good hands. http://safeguardguaranty.com/
Mike Scott
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Re: Can we talk about what I think is a blind spot in our retirement planning?

Post by Mike Scott »

Other than saving "more", what would you suggest doing?
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RickBoglehead
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Re: Can we talk about what I think is a blind spot in our retirement planning?

Post by RickBoglehead »

When does it end?

I mean that seriously. You're supposed to plan for living until some age, that you figure out on your own. You do your best plan, and figure out 86. But what if you live to 105?

We plan on certain expenses, and then forecast them going up X or Y%. What if they go up 5 times that?

What if interest rates go to 27%? Or negative?

We plan on all sorts of things, and do all sorts of whatifs, and don't come close to including everything. Nor do we do any analysis that anyone can see that says we forecast X and it didn't turn out even close to that.

I did my forecast and then added $25,000, because stuff happens. Or it doesn't.

If you're going to plan for divorce, do you also plan for each of you spending 5 or 6 digits on a lawyer? If you plan for divorce, do you then sit with your spouse and go over your plan and show him/her how you're planning for the possibility of divorce? How does that go over?

Been married 40+ years. Outlasted both my siblings, and my parents, by decades.

I did hear that Debbie Downer was a Boglehead member. https://www.youtube.com/watch?v=TfE93xON8jk Wah-wah

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Re: Can we talk about what I think is a blind spot in our retirement planning?

Post by RickBoglehead »

michoco911 wrote: Sat Jun 05, 2021 10:25 am Well i treat this very easily.
I am hoping for a portfolio that would generate 10K$ per month to spend it with my wife on travels, hotels and other activities.
In case of divorce (highly unlikely) i guess a 5K$ per month would be fine for me to enjoy the same activities alone :)
We should not overthink these stuff. Live the moment and enjoy it while preparing for a wealthy and decent retirement through consistent investments.
This ^^
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Wricha
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Re: Can we talk about what I think is a blind spot in our retirement planning?

Post by Wricha »

Unless you are very wealthy, a divorce almost certainly will mean a diminished financial lifestyle. I had read sometime ago that divorce was the leading cause of poverty. (I don’t have source so I might have read it wrong) but it is almost certain, it does not build wealth.
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Re: Can we talk about what I think is a blind spot in our retirement planning?

Post by leftcoaster »

When I first read this post I thought “this is not actionable in the BH sense of that term,” despite the OPs effort.

On reflection, a way to make it actionable might be to update the standard portfolio evaluation template to include the stats that could be used to bring the probability of divorce into view so that it’s not the blind spot the OP rightly says that it may be for many.

I see people with no kids yet (but anticipating) or very young kids talking about retiring in their 30s. So many things can occur even for someone retiring at 65 that can break those plans. Parenting changes the dynamics of a marriage immensely and it keeps changing at every age. New costs arise - disabilities, private schools, and on and on.

I’m reminded of the scene in Shawshank Redemption when the lead character is working on the roof and makes his first contact with the head guard as a financial advisor. His advice involves moving assets to his wife’s name and so the very first question he asks - and that almost gets him tossed off the roof - is “do you trust your wife?” How’s that for a financial planning introduction!?!
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Re: Can we talk about what I think is a blind spot in our retirement planning?

Post by leftcoaster »

Wricha wrote: Sat Jun 05, 2021 10:33 am Unless you are very wealthy, a divorce almost certainly will mean a diminished financial lifestyle. I had read sometime ago that divorce was the leading cause of poverty. (I don’t have source so I might have read it wrong) but it is almost certain, it does not build wealth.
This is a good overview of Gray divorce and its impacts on health and wealth, including the descent into poverty.

https://www.bloomberg.com/news/articles ... udies-show

Recognizing the gender bias of the old saw, I’ll quote it anyway for the doggerel : “happy wife, happy life.”
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TomatoTomahto
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Re: Can we talk about what I think is a blind spot in our retirement planning?

Post by TomatoTomahto »

MaxiFiPlanner has a setting “two can live as cheaply as” where you can say, for example, that 2 can live as cheaply as 1.7 single people who don’t share a household. It won’t account for attorneys and such, but you could set the number to 1, bypassing any economies of scale.

https://maxifiplanner.com/managedfiles/ ... ivorce.pdf
I get the FI part but not the RE part of FIRE.
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Re: Can we talk about what I think is a blind spot in our retirement planning?

Post by KlangFool »

Willmunny wrote: Sat Jun 05, 2021 10:12 am
That is the statistical chance of a divorce.
Willmunny,

And, why do you think that is a bad thing?

My family member divorced and the spouse took 50% of the asset. As a result of the divorce, my family member early retired.

The correct answer is "it depends".

Some spouse/partner are spenders. Some spouse/partner are savers. To the savers, 50% of the asset is more than enough for them to retire. To the spenders, 50% of the asset is not enough.

The most relevant question to the person is are you the savers or spenders in this marriage? Can you retire well with 50% of the asset? If not, you are spending more than your share.

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desiderium
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Re: Can we talk about what I think is a blind spot in our retirement planning?

Post by desiderium »

Divorce is one of several difficult to think about risks risks that SWR calculations don't take into account. Particularly for those deciding to leave the workforce in their 40's and 50's--peak earning years--ongoing activities that maintain one's human capital (part time work, consulting, etc) can be a useful hedge against these risks.
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Re: Can we talk about what I think is a blind spot in our retirement planning?

Post by sailaway »

leftcoaster wrote: Sat Jun 05, 2021 10:37 am
Wricha wrote: Sat Jun 05, 2021 10:33 am Unless you are very wealthy, a divorce almost certainly will mean a diminished financial lifestyle. I had read sometime ago that divorce was the leading cause of poverty. (I don’t have source so I might have read it wrong) but it is almost certain, it does not build wealth.
This is a good overview of Gray divorce and its impacts on health and wealth, including the descent into poverty.

https://www.bloomberg.com/news/articles ... udies-show

Recognizing the gender bias of the old saw, I’ll quote it anyway for the doggerel : “happy wife, happy life.”
That also says that Boomers are, and always have been, the driving force behind high divorce rates. Not really sure how many Boomers were getting divorced in the 70's, though. Some of them weren't old enough to get married. I think Boomers get blamed for a lot of stuff their immediate predecessors did.
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Re: Can we talk about what I think is a blind spot in our retirement planning?

Post by bsteiner »

Willmunny wrote: Sat Jun 05, 2021 10:12 am ... I have for some time believed there is one large blind spot in the financial/retirement plans of many Bogleheads forum posters .... That is the statistical chance of a divorce.
...
... This is probably a very tiny risk for people such as, for example, my parents, who are older and have been married for 50+ years. ...
Since your parents are alive, you could reduce your risk by having them provide for you (in their Wills) in trust rather than outright. Our clients almost always do this.
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Re: Can we talk about what I think is a blind spot in our retirement planning?

Post by qwertyjazz »

RickBoglehead wrote: Sat Jun 05, 2021 10:31 am When does it end?

I mean that seriously. You're supposed to plan for living until some age, that you figure out on your own. You do your best plan, and figure out 86. But what if you live to 105?

We plan on certain expenses, and then forecast them going up X or Y%. What if they go up 5 times that?

What if interest rates go to 27%? Or negative?

We plan on all sorts of things, and do all sorts of whatifs, and don't come close to including everything. Nor do we do any analysis that anyone can see that says we forecast X and it didn't turn out even close to that.

I did my forecast and then added $25,000, because stuff happens. Or it doesn't.

If you're going to plan for divorce, do you also plan for each of you spending 5 or 6 digits on a lawyer? If you plan for divorce, do you then sit with your spouse and go over your plan and show him/her how you're planning for the possibility of divorce? How does that go over?

Been married 40+ years. Outlasted both my siblings, and my parents, by decades.

I did hear that Debbie Downer was a Boglehead member. https://www.youtube.com/watch?v=TfE93xON8jk Wah-wah

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alpenglow
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Re: Can we talk about what I think is a blind spot in our retirement planning?

Post by alpenglow »

While I'd consider my odds of divorce to be extremely low, anything could happen. The good thing is that I could live in a small cabin in the woods very comfortably, so my financial impact would be low. She probably wouldn't go that far, but there would still be plenty for both of us.
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Re: Can we talk about what I think is a blind spot in our retirement planning?

Post by TomatoTomahto »

bsteiner wrote: Sat Jun 05, 2021 10:48 am
Willmunny wrote: Sat Jun 05, 2021 10:12 am ... I have for some time believed there is one large blind spot in the financial/retirement plans of many Bogleheads forum posters .... That is the statistical chance of a divorce.
...
... This is probably a very tiny risk for people such as, for example, my parents, who are older and have been married for 50+ years. ...
Since your parents are alive, you could reduce your risk by having them provide for you (in their Wills) in trust rather than outright. Our clients almost always do this.
We did it for our kids, who aren’t even married yet. With typical BH sized assets, it’s a good idea IMO.
I get the FI part but not the RE part of FIRE.
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Re: Can we talk about what I think is a blind spot in our retirement planning?

Post by 59Gibson »

RickBoglehead wrote: Sat Jun 05, 2021 10:32 am
michoco911 wrote: Sat Jun 05, 2021 10:25 am Well i treat this very easily.
I am hoping for a portfolio that would generate 10K$ per month to spend it with my wife on travels, hotels and other activities.
In case of divorce (highly unlikely) i guess a 5K$ per month would be fine for me to enjoy the same activities alone :)
We should not overthink these stuff. Live the moment and enjoy it while preparing for a wealthy and decent retirement through consistent investments.
This ^^
+1
The what-ifs can never end. There will always be one more. I realize BHers want every base/situation covered- guess what it's simply not practical or possible..and worse it can lead to obsessing over things that cannot be controlled, many successful people have this problem in spades.
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Re: Can we talk about what I think is a blind spot in our retirement planning?

Post by rebellovw »

Edit: You can't "predict - not change" the future - just do what you can to save and not worry about stuff that hasn't happened yet.

I also think we all plan for X + "extra for the unknown" - and that extra is not a fixed amount - it is what ever we can spare.
Last edited by rebellovw on Sat Jun 05, 2021 11:15 am, edited 1 time in total.
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Re: Can we talk about what I think is a blind spot in our retirement planning?

Post by H-Town »

rebellovw wrote: Sat Jun 05, 2021 10:58 am You can't change the future - just do what you can to save and not worry about stuff that hasn't happened yet.

I also think we all plan for X + "extra for the unknown" - and that extra is not a fixed amount - it is what ever we can spare.
Did you mean you can’t change the past?

There’s a saying: don’t keep doing the same thing and expect a better outcome. If you want things to change, you just need to be the change you want to see.

We change the future by our planning and our actions.
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Re: Can we talk about what I think is a blind spot in our retirement planning?

Post by Wanderingwheelz »

rebellovw wrote: Sat Jun 05, 2021 10:58 am You can't change the future - just do what you can to save and not worry about stuff that hasn't happened yet.

I also think we all plan for X + "extra for the unknown" - and that extra is not a fixed amount - it is what ever we can spare.
This is why we mow our own grass and brew our own coffee. 😀

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Inframan4712
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Re: Can we talk about what I think is a blind spot in our retirement planning?

Post by Inframan4712 »

Talk about a blindspot. Has one person in this thread mentioned the possibility of being nicer to your spouse?

I remember the thread from a few months ago by a man who had significant assets yet lived like he had none. He wanted to know if he was in good shape financially. I pointed out his biggest risk was his wife would get tired of his penny-pinching and divorce him and live well on her half.

A more gentle way to put it is make sure your spouse is whole heartedly on the same page financially.

I’ve seen this result in a friend getting divorced twice before he met a real miser like he is.
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Re: Can we talk about what I think is a blind spot in our retirement planning?

Post by musicmom »

Wow.
We're late 60s now, married 39 yrs.
Not planning on divorce, but who knows?

This thread did strike a cord though.
I always had the megacorp job wih benefits, pension, 403b, etc.
We chose to save alot in my name intending to share as we retired. DH has small pension and very small IRA.

I imagine if we divorced, his lawyer would be eying my IRA.
And I'd think that 'fair' considering how we had accumulated it.

Interesting thread.
Guess we were optimistic in our plan.
So far, so good.
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Re: Can we talk about what I think is a blind spot in our retirement planning?

Post by rebellovw »

H-Town wrote: Sat Jun 05, 2021 11:09 am
rebellovw wrote: Sat Jun 05, 2021 10:58 am You can't change the future - just do what you can to save and not worry about stuff that hasn't happened yet.

I also think we all plan for X + "extra for the unknown" - and that extra is not a fixed amount - it is what ever we can spare.
Did you mean you can’t change the past?

There’s a saying: don’t keep doing the same thing and expect a better outcome. If you want things to change, you just need to be the change you want to see.

We change the future by our planning and our actions.
Doh- I mean - you can't predict the future - thanks!
Normchad
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Re: Can we talk about what I think is a blind spot in our retirement planning?

Post by Normchad »

Mike Scott wrote: Sat Jun 05, 2021 10:30 am Other than saving "more", what would you suggest doing?
Diversify your spouses! Start dating other people. Get an entire haystack of them!
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Re: Can we talk about what I think is a blind spot in our retirement planning?

Post by nisiprius »

Believe it or not...

Image

(The Bogleheads' Guide to Retirement Planning, chapter 19, "Divorce and Other Financial Disasters.")

Absolute truth, I haven't read that chapter. Personally, I file it under "cross that bridge if we come to it," and "my fair or unfair share of what we've got would probably be enough to survive on, and that's all I need to know for now."

I did know an elderly couple that was estranged who continued living in the same house and never talking to each other, because of the economics of the situation.

Like all "black swans," just because the total probability of running into a black swan can be disturbingly high, that doesn't mean you can deal mentally or financially with making 100 detailed plans to protect against 100 different scenarios, each of which has a 1% probability of happening.
Last edited by nisiprius on Sat Jun 05, 2021 11:30 am, edited 3 times in total.
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Re: Can we talk about what I think is a blind spot in our retirement planning?

Post by sfnerd »

This topic is brought up occasionally in the context of different portfolio review threads, and often regarding FIRE types who are cutting it close already with their SWR. The article linked above is a great one:
My personal view is that you try to handle it like all risks: effort mitigating should be proportional based on probability of that event. The probability is hard to determine with divorce, however. Few couples acknowledge the possibility of divorce.

What I've done: a very fair prenuptial agreement that outlines how assets are split, protects assets acquired before marriage, defines how arbitration works, etc. Full representation by legal counsel for both of us before getting married. This minimizes the cost of a divorce.

Next, when I plan financial independence or retirement, I calculate what expenses would be for both of us individually, and make sure we could live good lives even in the case of a divorce. Since divorce is a low probability event (hopefully!) I'm not going to spend much extra time working to oversave for this possibility, but I'm going to make sure we're not eating dog food in that scenario.

Finally, and most importantly, I try to keep my wife - and myself - happy. Planning for divorce is like planning for a heart attack: if it happens, money is going to be low on my list of worries.
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Re: Can we talk about what I think is a blind spot in our retirement planning?

Post by goblue100 »

I always hope for the best and plan for the worst. My wife and I have been married 33 years. Will it last? Who knows. We think it will, but if it doesn't we will split it 50/50 and move on.
Financial planners are savers. They want us to be 95 percent confident we can finance a 30-year retirement even though there is an 82 percent probability of being dead by then. - Scott Burns
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Re: Can we talk about what I think is a blind spot in our retirement planning?

Post by celia »

Wricha wrote: Sat Jun 05, 2021 10:33 am Unless you are very wealthy, a divorce almost certainly will mean a diminished financial lifestyle. I had read sometime ago that divorce was the leading cause of poverty. (I don’t have source so I might have read it wrong) but it is almost certain, it does not build wealth.
It does if you were married to someone who was always spending or gambling or using illicit drugs. In those cases, you were already losing a good chuck of your potential wealth but after the divorce, accumulation is much easier.


I read most of the original reference and although there are good points there, I just see that Bogleheads have similar attributes as those who are less likely to divorce: we’re better educated, likely waited to an older age before getting married, and have higher incomes than average. For those of us who are married and over 50, we may have similar chances of being widowed as being divorced with our “widowed” chances increasing each year while our “divorced” chances decline.

And I am always looking at a study to see how it was done (which often reveals the limited population that was surveyed). In the referenced article, it doesn’t even say it is a study. It seems more like a compilation of disjoint sources as it references 65 other papers, with each paper assumedly based on a different group of people.
Last edited by celia on Sat Jun 05, 2021 11:53 am, edited 1 time in total.
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Re: Can we talk about what I think is a blind spot in our retirement planning?

Post by Ghost2 »

Mike Scott wrote: Sat Jun 05, 2021 10:30 am Other than saving "more", what would you suggest doing?
Two of the biggest costs of divorce which can easily be cut through advanced planning are the costs of legal fees and the costs of financial changes.

(1)
Don't diversify across the two spouses' accounts.
Balance within each spouse's accounts, and generally keep them about the same size to the extent possible.
Put both assets and debts in the appropriate names (her car in her name, his in his).
The cost of transferring all of these accounts is high enough it's a giant waste of money.

(2)
Pre-nups should be used to protect the spouse giving up the most, not the one bringing the most wealth. So the spouse who gives up a career in order to provide a stable family life should be protected by the prenup. That spouse will not having to argue during the heat of a divorce that s/he did so in order to be protected if the pre-nup spells that out. That cuts huge legal fees and cuts away a lot of the bile that can make everything else expensive too.

Neither of these should be objectionable to a couple in a solid marriage because they both apply if, say, one of the spouses gets a head injury and changes personality -- something I've seen happen in two marriages.
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ResearchMed
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Re: Can we talk about what I think is a blind spot in our retirement planning?

Post by ResearchMed »

59Gibson wrote: Sat Jun 05, 2021 10:55 am
RickBoglehead wrote: Sat Jun 05, 2021 10:32 am
michoco911 wrote: Sat Jun 05, 2021 10:25 am Well i treat this very easily.
I am hoping for a portfolio that would generate 10K$ per month to spend it with my wife on travels, hotels and other activities.
In case of divorce (highly unlikely) i guess a 5K$ per month would be fine for me to enjoy the same activities alone :)
We should not overthink these stuff. Live the moment and enjoy it while preparing for a wealthy and decent retirement through consistent investments.
This ^^
+1
The what-ifs can never end. There will always be one more. I realize BHers want every base/situation covered- guess what it's simply not practical or possible..and worse it can lead to obsessing over things that cannot be controlled, many successful people have this problem in spades.
When planning grant proposals, the (semi-)joke went...
Think of EVERYTHING that could go wrong and how would that affect the budget and schedule?
Now add that up as if they ALL happened.
Now... double that.

Right.
For extra safety, take that figure x 10.

Also keep in mind that most modeling of various withdrawal rates end up with vast sums, far more than the starting amount. That's the "cost" of planning for the downside.

Or wrap yourself up in several layers of bubble-wrap in several ways, etc...

Divorce may be really bad financially or even catastrophic, but that's not the only catastrophic thing tha can happen. And some could be much worse...
Main/only household earner has a catastropic injury, etc. So not only care needed, but loss of income. And not all of those events are covered by insurance, not to mention insurance likely won't pay all costs of "living like it never happened" (which is absolutely impossible for other reasons, of course).
That's just one scenario.

All of our (everyone's) planning isn't going to account for the worst of the worst, which would include more than one, or two, catastrophic events.

And then there's ransomware... :annoyed

As stated above,
"The what-ifs can never end."

RM
This signature is a placebo. You are in the control group.
H-Town
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Re: Can we talk about what I think is a blind spot in our retirement planning?

Post by H-Town »

Ghost2 wrote: Sat Jun 05, 2021 11:52 am
Mike Scott wrote: Sat Jun 05, 2021 10:30 am Other than saving "more", what would you suggest doing?
Two of the biggest costs of divorce which can easily be cut through advanced planning are the costs of legal fees and the costs of financial changes.

(1)
Don't diversify across the two spouses' accounts.
Balance within each spouse's accounts, and generally keep them about the same size to the extent possible.
Put both assets and debts in the appropriate names (her car in her name, his in his).
The cost of transferring all of these accounts is high enough it's a giant waste of money.

(2)
Pre-nups should be used to protect the spouse giving up the most, not the one bringing the most wealth. So the spouse who gives up a career in order to provide a stable family life should be protected by the prenup. That spouse will not having to argue during the heat of a divorce that s/he did so in order to be protected if the pre-nup spells that out. That cuts huge legal fees and cuts away a lot of the bile that can make everything else expensive too.

Neither of these should be objectionable to a couple in a solid marriage because they both apply if, say, one of the spouses gets a head injury and changes personality -- something I've seen happen in two marriages.
Good thought.

For us, since we are a two-income household, we split expense 50/50. For discretionary expense, we split 50/50 if it benefits us both (travel, home improvement, etc.). If I spend a discretionary expense for me, it’s on my tab, and vice versa. We also keep investable assets separately. In our excel tracking, we keep things separately and as transparent as we could. So there’s no doubt about financial picture between us.
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billthecat
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Re: Can we talk about what I think is a blind spot in our retirement planning?

Post by billthecat »

Mike Scott wrote: Sat Jun 05, 2021 10:30 am Other than saving "more", what would you suggest doing?
Don't get married! I mean, if you're the breadwinner, don't get married!
We cannot direct the winds but we can adjust our sails • Warning: you will succeed at whatever you focus on, good or bad
Tamalak
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Re: Can we talk about what I think is a blind spot in our retirement planning?

Post by Tamalak »

billthecat wrote: Sat Jun 05, 2021 12:01 pm
Mike Scott wrote: Sat Jun 05, 2021 10:30 am Other than saving "more", what would you suggest doing?
Don't get married! I mean, if you're the breadwinner, don't get married!
My precise plan!
Last edited by Tamalak on Sat Jun 05, 2021 1:23 pm, edited 1 time in total.
halfnine
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Re: Can we talk about what I think is a blind spot in our retirement planning?

Post by halfnine »

billthecat wrote: Sat Jun 05, 2021 12:01 pm
Mike Scott wrote: Sat Jun 05, 2021 10:30 am Other than saving "more", what would you suggest doing?
Don't get married! I mean, if you're the breadwinner, don't get married!
The real risk is not so much marriage but being the non-custodial parent when minor children are involved particularly so if you are the father. And marriage isn't required for that. Getting divorced when you don't have any children or when your children are adults children isn't nearly as much as a concern if you can live on half which at that point should be preferable to sharing it all and being miserable.
Lee_WSP
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Re: Can we talk about what I think is a blind spot in our retirement planning?

Post by Lee_WSP »

I don't think divorce is really any different than being single again.

When married you have combined incomes and a roommate who shares your life's goals and household chores. When single, your costs for fixed expenses essentially doubles and your costs for variable expenses will probably end up being more than 50% since there is a lot of economies of scale for couples (food, heating/cooling, and entertainment.

Your wealth, minus any costs of divorce (legal and moving and whatnot), is actually not affected at all. It is simply bifurcated into the underlying separate shares.

How to plan for it? It's probably simplest to simply plan for the costs of two single people as opposed to one married couple.

Otherwise, just don't get divorced. :beer
H-Town
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Re: Can we talk about what I think is a blind spot in our retirement planning?

Post by H-Town »

billthecat wrote: Sat Jun 05, 2021 12:01 pm
Mike Scott wrote: Sat Jun 05, 2021 10:30 am Other than saving "more", what would you suggest doing?
Don't get married! I mean, if you're the breadwinner, don't get married!
Have your thought about common law marriage? You can’t enjoy the benefit of sharing your life with you significant other, but refusing the responsibilities that come with it. In other words, you can’t have your cake and eat it too.
Somethingwitty92912
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Re: Can we talk about what I think is a blind spot in our retirement planning?

Post by Somethingwitty92912 »

I go the other way with this.

You could each have 25x, or you could focus on making your marriage stronger by working on it every day. Two people can basically live at the cost of one. Also, two people don’t have to work as hard at, maintaining health, wealth, real estate… ect. I could go on.

Simply put your best investment is your marriage, so perhaps we should all spend more time working on that, and not eking out an extra 1% by tilting towards small caps, or whatever nonsense is on the chopping block this week.

There’s an unlimited amount of money, time is the only thing in short supply. How we spend it, who we spend it with, how we conduct ourselves, and how we treat those around us is far more important than the money we have.

This is the fundamental thing everyone is forgetting these days with the race to the bottom of politics, business, and family.

Just one guys opinion.
Livehard1234
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Re: Can we talk about what I think is a blind spot in our retirement planning?

Post by Livehard1234 »

My parents gave me the following advice on the key to a long lasting marriage:

(1) A shared commitment that divorce is not an option and that when times get hard the answer is joint problem solving; without a foundation of certainty, the fantasy of something new in hard times starts looking more attractive

(2) A realization that the biggest risk to our future plans (not just financial but also in how we raise our kids) is divorce, we should put equal time in securing our marriage as we do other areas of our future (I.e. financial stability/job and child rearing).

Putting in shared contingency plans for divorce would seem to erode both of these. I will focus my energy on ensuring it doesn’t happen.
flyingaway
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Re: Can we talk about what I think is a blind spot in our retirement planning?

Post by flyingaway »

Quite a few well-known MMM people, including MMM himself, are divorced recently, after their early retirement.
I am worried about that fully retired (relatively young) people might find that retirement is a new challenge, you can only travel that much. Plenty of boring time together is likely to present new challenges.
WhyNotUs
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Re: Can we talk about what I think is a blind spot in our retirement planning?

Post by WhyNotUs »

TomatoTomahto wrote: Sat Jun 05, 2021 10:22 am I have been previously divorced, and the financial impact was staggering.
+1, had pretty much hit the number, was generous in divorce, had to rebuild again. This Bull Market made it all work but it did not have to be this way.
I own the next hot stock- VTSAX
Dottie57
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Re: Can we talk about what I think is a blind spot in our retirement planning?

Post by Dottie57 »

qwertyjazz wrote: Sat Jun 05, 2021 10:49 am
RickBoglehead wrote: Sat Jun 05, 2021 10:31 am When does it end?

I mean that seriously. You're supposed to plan for living until some age, that you figure out on your own. You do your best plan, and figure out 86. But what if you live to 105?

We plan on certain expenses, and then forecast them going up X or Y%. What if they go up 5 times that?

What if interest rates go to 27%? Or negative?

We plan on all sorts of things, and do all sorts of whatifs, and don't come close to including everything. Nor do we do any analysis that anyone can see that says we forecast X and it didn't turn out even close to that.

I did my forecast and then added $25,000, because stuff happens. Or it doesn't.

If you're going to plan for divorce, do you also plan for each of you spending 5 or 6 digits on a lawyer? If you plan for divorce, do you then sit with your spouse and go over your plan and show him/her how you're planning for the possibility of divorce? How does that go over?

Been married 40+ years. Outlasted both my siblings, and my parents, by decades.

I did hear that Debbie Downer was a Boglehead member. https://www.youtube.com/watch?v=TfE93xON8jk Wah-wah

RDWHAHB Relax, Don't Worry, Have A Homebrew :beer
Awful jokes but hilarious skit when they can’t hold it together - thank you for the humor
+1000
Dottie57
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Re: Can we talk about what I think is a blind spot in our retirement planning?

Post by Dottie57 »

:oops:
Ghost2 wrote: Sat Jun 05, 2021 11:52 am
Mike Scott wrote: Sat Jun 05, 2021 10:30 am Other than saving "more", what would you suggest doing?
Two of the biggest costs of divorce which can easily be cut through advanced planning are the costs of legal fees and the costs of financial changes.

(1)
Don't diversify across the two spouses' accounts.
Balance within each spouse's accounts, and generally keep them about the same size to the extent possible.
Put both assets and debts in the appropriate names (her car in her name, his in his).
The cost of transferring all of these accounts is high enough it's a giant waste of money.

(2)
Pre-nups should be used to protect the spouse giving up the most, not the one bringing the most wealth. So the spouse who gives up a career in order to provide a stable family life should be protected by the prenup. That spouse will not having to argue during the heat of a divorce that s/he did so in order to be protected if the pre-nup spells that out. That cuts huge legal fees and cuts away a lot of the bile that can make everything else expensive too.

Neither of these should be objectionable to a couple in a solid marriage because they both apply if, say, one of the spouses gets a head injury and changes personality -- something I've seen happen in two marriages.
I so agree with this.
DoTheMath
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Re: Can we talk about what I think is a blind spot in our retirement planning?

Post by DoTheMath »

Yes, divorce is always a real possibility. Any plan which doesn't account for that possibility is a flawed plan. It's as likely and as devastating as other contingencies people should plan/insure for (e.g., sequence of returns, major health problems).

In our case, we have strong independent streaks and our finances are somewhat separate. When we talk about retirement goals, it is in the context where we each feel comfortable with retiring on our individual savings alone. Of course, it will be much more luxurious retirement if we do it together (and that's the plan!). Also, we have similar careers with similar incomes, and have similar personal finance philosophies, so our trajectories are pretty parallel. I'm a couple of years ahead because of frugality/cheapness and a comfort with more aggressive investing, but we're close enough for government work.

Taken altogether, we are fortunate that we haven't had to navigate complicated discussions. We don't plan to split, but we both want both of us to be in a good position if that happens and we have similar ideas about how to get there. I can see it being a much more delicate conversation for most others.

But to ignore the issue is foolishness.
“I am losing precious days. I am degenerating into a machine for making money. I am learning nothing in this trivial world of men. I must break away and get out into the mountains...” -- John Muir
vested1
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Re: Can we talk about what I think is a blind spot in our retirement planning?

Post by vested1 »

On my third marriage, this one nearing 30 years. Got wiped out twice and still came back. I thought that getting remarried after two failures was a crapshoot, but I guess I rolled a seven this time before I hung up the dice. Luckily, she didn't realize she rolled snake eyes.

Life is too short to be miserable.
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