After 18 years in the National Football League, the Denver Broncos' star quarterback, Peyton Manning, is calling it quits after a very successful career. We wish him well and hope that he's made the preparations needed to enjoy a long, comfortable retirement. If he has, he'll be in the minority. Research shows that an estimated 60% of retired NFL players go broke within five years of retirement; nearly 16% declare bankruptcy.
Fortunately, there's a lot that Peyton can do to avoid that fate. While most of us won't be retiring at 39, retirees still have a lot of the same worries as pro athletes. Here's the advice we would give Peyton if he were our client and friend.
Congratulations on your retirement! You've had an amazing career and I'm glad you got to go out on a high note. I'm excited to see what you have planned next. I also want to give you some advice as you make the transition to retirement. I hope you find it helpful.
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 retirement. Stop and smell the roses for a while and don't make any major decisions about your future until you feel comfortable with your new phase of life. Many people who come from high-pressure, competitive jobs feel the urge to do something, anything when they retire. You might be tempted to fill the void by rushing into a new business, partnership, or buying expensive toys or real estate. Don't, just yet.
2. Don't Jump Into Businesses or Investments You Don't Understand
As a guy with money, you're going to be surrounded by people pushing every kind of business, product, and investment there is. Don't get taken in by the hype; think very carefully before you put your life savings into something you don't completely understand, especially if the person asking is a friend or relative. Caring about someone doesn't mean you should put your future at risk. You've worked hard to get where you are; don't threaten it 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're used to working with the best in your business. Expect the same from your financial team. Don't just go with the guy you went to school with, the one your buddy works with, or the one offering you the moon.
Talk to a lot of professionals and look for ones who want to get to know you and your dreams before making suggestions, answer your questions honestly, admit to uncertainty, and don't make a lot of promises. Pick the professionals that are willing to ask you the hard questions and tell you the difficult truths you may not want to hear. Then listen to them.
Let your team be your barrier against hype, promises, 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've got a long retirement ahead of you, one that's likely to last 40 years or more. Though you've amassed a fortune most of us would envy, it's not going to be enough if you don't think ahead and make prudent choices. 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 have to cultivate patience. Don't forget about healthcare!
How Can We Help?
Even if you're not Peyton Manning, most of the advice above still applies. Retirement is a challenging transition and it pays to get it right. We work closely with our clients long before and after retirement to understand their dreams and help create personalized retirement strategies that take them where they want to go. If you, or someone you know, have questions about retirement, give us a call.
Zack Alkhamis CRPC, CIS, CFS, CES
Matthew Jarrell, CIS, CES, CFS, AIF
Timothy A. McAfee, CPA, CFP, PPC, MST