(Reprinted from the May 2016 edition of the Bath Country Journal and Richfield Times.)
After 18 years in the National Football League, the Denver Broncos’ star quarterback, Peyton Manning, is calling it quits after a very successful career. Being a superstar NFL quarterback and having many endorsement deals, a financially comfortable retirement is likely a foregone conclusion for Peyton. However, he will be in the minority of his NFL counterparts. A recent NBER research paper shows 16% declare bankruptcy within twelve years of retirement while more than half experience significant financial hardship within five years.
While most of us will not be retiring at age 39, retirees still have many of the same worries as pro athletes. Here is some advice I would give Peyton.
1. Don’t Make Any Sudden Decisions
Take some time to process the transition away from a high-octane career and think about what you want out of life in retirement. Stop and smell the roses for a while and do not make any major decisions about your future until you feel comfortable with your new phase of life. Many people who come from high-pressure jobs that fill their ego and sense of purpose feel quite uncomfortable with the quietness of retirement. You might be tempted to fill the void by rushing into a new business, partnership, or buying expensive toys or real estate. Do not do that – at least not just yet.
2. Don’t Jump Into Investments You Don’t Understand
As a person with money, you are going to be surrounded by people pushing every kind of business, product, and investment there is. Do not be taken in by the hype. Think very carefully before you put your life savings into something you do not completely understand, especially if the person asking is a friend or relative. Caring about someone does not mean you should put your future at risk. You have worked hard to get where you are. Do not threaten your well-being by taking too many risks now. Always remember, anything that sounds too good to be true usually is.
3. Work With A Team of Professionals
As a professional athlete, you are used to working with the best in your business. Expect the same from your financial team. Do not just go with the person you went to school with, the one your friend works with, or the one that bought you a free chicken dinner and told you how great annuities are.
Talk to many professionals – Certified Financial Planner® professionals – and look for ones who want to get to know you before making suggestions and answer your questions openly and honestly. Pick the professionals that are experienced, competent, transparent in their compensation, and are willing to ask you the hard questions and tell you the difficult truths that you may not want to hear. Then listen to them.
Let your team be your barrier against hype, information overload, and anyone looking for a handout. Turn to them when you have ideas or questions, or need to talk out a decision.
4. Have A Strategy for Retirement
You have a long retirement ahead of you, one that is likely to last 40 years or more. Though you have amassed a fortune most of us would envy, it may not be enough if you do not think ahead and make prudent choices. Be sure to consider your retirement, spending, investing, taxes, charitable giving, insurance, and estate planning together as an integrated part of your overall wealth management.
You should be thinking about the lifestyle you can afford in retirement and making sure your money lasts as long as you need it. Have a strategy for good and bad markets and remember that long-term investors must have patience.
Kevin Kroskey, CFP®, MBA is President of True Wealth Design, an independent investment advisory and financial planning firm that assists individuals and families with their overall wealth management, including retirement planning, tax planning and investment management needs.