Retirement – a time to do absolutely nothing or splurge on anything you’ve always wanted to may not be so fun after all especially as costs eat into purchasing power more than ever before.
With virtually everything costing almost 9% more than a year ago, except Jack Dorsey’s first Tweet, some retirees are so desperate and unretiring.
If there’s one thing for sure, regrets are more common when decisions are made sporadically. Just look at all the millions of Millennial first-time home buyers and job quitters reversing course since March 2020.
At least this couldn’t be a hotter seller’s market and tighter labor market with power back in the candidate’s hands.
The number one stress in American’s lives are finances so having to deal with it at the start of retirement is a royal nightmare.
After all, you’ve gone through pain, sweat, and tears all your whole life to provide yourself the buffer and freedom to live off of your supplemental income. The last thing you want to find out is that your energy and hard work were for nothing. As a result, it’s always better to have a bit more than a bit less when it comes to our finances.
With everything else, stick with moderation.
Sitting on the beach and traveling the world is everyone’s dream but for how long?
Until reality starts to settle in and you realize you still have half your life waiting for you beyond the sunset and margaritas, you need to cultivate a purpose beyond yourself.
The happiest people on earth don’t have the fattest wallets. They are on a mission to serve the world not themselves. The more you focus on helping others, the greater gift later on. Over-analysis of your portfolio to your brain never helps. In fact, it causes more paranoia and confusion, so snap out of yourself and start focusing on using your super powers to help others instead. Then you’ll never want to officially ‘retire’ and work will never feel like it, rather a hobby.
Not Working?
Some people don’t even know what working really means because it is treated differently. I recommend you do the same.
Retirement is the scariest part of one’s life and the majority of Americans aren’t ready for it. The ideal net worth to have in retirement is $10m. Given that this is an overly audacious goal for 95% of the American population, I urge you to focus on your net income, not your net-worth number instead. Even if your net-worth drops, if your income is steady, that’s all that matters.
Due to a lack of social and governmental support, retirement in this country has become the population’s biggest fear. This can also be partially blamed by the lack of financial literacy emphasis in the education system that doesn’t instill the basics everyone should know before graduation. Compounding works wonders and is the 8th wonder of the world for a reason.
As with every trend, prediction, and indicator, it goes through the classic cycle of a wave. Most notably, just like the one and only COVID-19 which is currently experiencing a new variation of hte omicron variant, the BA.2 variant.
One of the many less-lethal waves that has compounded during the pandemic is with the boom of retirees. Alongside this hot trend, tie-die, Millennial homebuyers, vacation homes, NFTs, crypto, and a plethora of other random purchases and hobbies that we never thought we needed until lockdown rose to prominence and with a lack of fundamentals, quickly dissipated. I’m sure we all know someone who either moved, made a luxury purchase, invested more heavily, and or saw their Google Search history tick up with the term, ‘FIRE movement’.
Despite the tight labor market and historically high unemployment rate at 3.6%, there are still 1.6 million fewer jobs now than there were pre-pandemic. The people who are left behind at these jobs have to take have to now jump into a labor market that may be considered ideal for them but is also fiercely competitive. No more Pelotons for free.
So where is this enthusiasm to jump back into the labor market coming from?
Boredom, anticipation, or perhaps, regret?
I posit it is two underlying reasons. They also happen to be one of the main reasons why quit rates soared at the start of the pandemic:
-Sense of appreciation and belonging
-Financial uncertainty
Retiring Mojo
A few months after Tom Brady didn’t take the Tampa Buccaneers to the Super Bowl, he decided to retire. He didn’t end it on a high note but with his illustrious career with multiple Super Bowl wins already, no one really paid attention to that final loss. He’s still loved!
Similar to legendary Coach K from Duke, he retired anyway after a final season game they just lost and the campus didn’t worry about it the next day.
With Brady’s retirement, there was speculation for months, possibly years on when one of the oldest quarterbacks would tie a bow on his extensive career yet Brady always kept this rumor on the sidelines until the Tamp Bucks lost.
Although it feels better to end everything on a strong positive note, that didn’t seem to impact Brady at the time and he carried on with his other business ventures, sprinting into the sunset. Until time took over. Too much of it that you loose your purpose no matter what tax bracket you may be in.
As an athlete, Brady would have rigid schedules with time away from any responsibilities besides from his sport. He would even sleep in a separate bedroom at home to get adequate rest.
If there’s one thing athletes have in common it is rest! Lots of it.
His team would be away for much of the year traveling and practicing so naturally childcare, cooking, cleaning, and even quality family time weren’t possible for him to tackle on. No pun intended.
Now that he got a taste of being a stay at home dad alongside juggling his various ventures without football for 30+ hours a week, these activities still didn’t replace the feeling he got from football.
Although a middle-class 70-year-old cannot compare themselves to 44-year-old $500m Tom Brady, we are all human at the end of the day and need economic security to survive.
It’s not about how much you earn, but how much you keep and if there’s one thing for sure, athletes, let alone celebrities don’t have the greatest track record for being frugal.
Check out model Kendall Jenner’s remarks when questioning what frugal means. You’ll be disappointedly unsurprised.
As I state all the time, even someone who earned all their life a third of what Brady makes per season may be financially more secure and ‘wealthier’ than him because they’ve always lived below their means, don’t have 3 kids, 7 homes, 12 vacations a year, 5 bodyguards, 3 assistants, 60 cars, to pay for etc. etc.
It seems like all of us want a feeling of belonging and security which comes from working and that flexibility comes from what you keep not spending. The grass isn’t always greener on the other side. So the next time you see a successful executive, athlete or celebrity unexpectedly retire, expect to see them hustle harder to make up for the inflated lifestyle they lived. Deep down we all need money, it’s just more embarrassing to see one waste it when they had more than 99.999% of the population.
Due to the physical strain, Brady was already a decade late to retiring as the median retirement for football players is 27–35 years old. But maybe Brady was so spooked out by all the bankruptcies, drug addiction, scandals, divorces, etc. that arise from athletes who retire only a few years in that he needed some distraction.
With his various other ventures, one would suspect he could’ve easily retired and not hopped back in. But of course, looks are very deceiving and only the wealthy really realize that. You must not look rich before you are rich, not the other way around all the time.
Unretiring is not as typical for athletes since their bodies will dictate how long they last but with more pros taking prioritizing their mental health such as Naomi Osaka, this may be a more permanent trend. As a tennis fanatic, I was shocked when Ashley Barty, the number one tennis player in the world retired in early April stating she doesn’t find any more enjoyment in her sport and wanted to discover something new. Let’s see how long that lasts until the bills start piling up.
Whether or not you are a star athlete or frugal stealth wealth minaimlist who has worked your butt off all your life to provide yourself a well-deserved retirement, money will forever be in the back of our minds and isn’t just a concern for everyday people.
Call Back?
According to the Labor Department, the number of people aged 55+ either working or looking for work increased to 38.9% in March, from 38.4% in October and nearly half a million people in that age bracket entered the labor force in the last six months!
As part of the youngest generation of Gen Zers, it’s been concerning me how much discussion I’ve heard around the FIRE (Financially Free Retire Early) movement. Wasn’t lockdown enough to show people how having no place to go or people to serve can really destroy us?
If you do have to retire, at least do something part-time. Traveling is fun but if you’ve instilled strict financial habits in yourself all your life, it will hurt to break the habit and increase annual expenses by 20%-70%.
Due to the fear of inflation, geopolitical risks, supply chain constraints, covid variants, and uncertainty looming for the foreseeable future in this endemic, current retirees are concerned if their money will work for them and have to dip into the workforce, whether they like it or not. These days living on a more fixed income such as Social Security, withdrawal rates of ~3%, tax-advantaged retirement accounts, and pension, inflation can eat into those returns, especially without a risk to risk-free-rate diversified portfolio.
Although doing nothing may seem fun for a bit, boredom does get boring after a while. Once you’ve gotten into the rythm of consistently saving, investing, and waking up every morning, it becomes break a 40-year-old habit. It’s like pain. It starts to become pleasure and a way to test your limits. You can’t teach an old dog new tricks.
Apparently, Americans relied too heavily on stimulus checks and unemployment benefits and by the time they dried up, that drove a spike in retirement. One of the largest market drivers for Baby Boomers to increase spending was from investment gains in real estate, alternative investments such as private equity, private debt, farmland, artwork, and of course notorious crypto and NFTs which are currently plummeting and as of right now are not inflationary hedges. Twitter co-founder Jack Dorsey created an NFT out of his first-ever tweet, which sold for $2.9 million a year ago, and in an auction this month, the highest bid was a mere $280!
Currently, 2.8% of workers who declared early retirement in January 2021 are back to work. Part-time certainly has its disadvantages over full-time, most notably with its offerings of health and disability insurance, qualified retirement accounts, PTO, possibly equity-based compensation, severance, etc. but if you want to get back to work and fill your days up without committing full-time while still staying safe, go for it in whatever way works best for you.
This is the best time to do so with the bargaining power and leverage back in your hands.
Remember, even as an athlete, life is a marathon, not a sprint.