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COLUMN: Financial planning and football
When they tee it up tomorrow, I will be in the minority. Unlike most locals I will be cheering for the Colts. It’s not that I have an animus for the Saints, I just have been a Colts fan before there was such a thing as the Super Bowl. For Christmas one year I got a Colts uniform and they have been my team since then. If the Saints win it won’t be half as disappointing as when Joe Willie and the Jets annihilated the Colts in Super Bowl III.
- There were a couple of nifty financial planning stories in the NFC championship game. Saints coach Sean Peyton lobbied hard for Gregg Williams to be the Saints defensive coordinator this year. Peyton put his money where his mouth is by taking a voluntary one year $250,000 pay cut in order to sign Williams. Salary figures in the NFL are often not disclosed but Fox Sports Jay Glazer said, “… Not sure if I have ever heard of a head coach going that far to get his guy.” Peyton shrewdly put money in its place. Unless he is a dunce Sean Peyton is set for life financially and if the Saints win the Super Bowl he will have something all the money in the world can’t buy.
Peyton was not being altruistic, rather this could turn out to be a savvy move. Rather than focus on the near-term, Peyton kept his eye on the goal and tomorrow night we will find out if Peyton wins the big prize. For anyone, 250K is a tidy sum but head coach of a world champion team … priceless. Saving for retirement is not the perfect analogy but it is similar. Don’t let short term issues distract you from your long term goals.
On the opposite sideline there was grey-bearded Brett Favre gamely leading the Vikings. Brent Arends of the Wall Street Journal Online writes in his Return on Investment column that we should take a page from Farve’s playbook, not the goofy interception; rather we should consider delayed retirement. While the 40 year-old Favre may be the past of the NFL, according to Arends, he is also the future of the workforce.
In 1960, Arends notes life expectancy was 70 now it is 78. In this same time period the average age that people begin receiving Social Security benefits continues to slide. The two year long recession has forced many into retirement but Arends warns that “delaying retirement is one of the strongest financial levers anyone can pull”. Not only does your Social Security benefit rise if you postpone benefits but you delay spending down your savings if you stay employed. For most people, not all, the break-even point for taking early benefits versus normal retirement age is early to mid 70s.
For a couple in their early sixties there is approximately a 30 percent chance at least one of them will live to 92. The real danger to taking early benefits is if you live that long you likely have spent all of your savings but you are stuck with a lower benefit.
“Doesn’t anybody here know anything?” was the customer’s booming compliant. In no time flat his dad had solved the contractor’s problem and left the store with a part-time job. A growing trend is phased retirement where employers can avoid losing their most experienced workers. A Cornell University study found that 19 percent of older workers wanted to be fully retired contrasted with 35 percent who preferred some form of partial retirement. If you save for retirement and live within your means you will have the flexibility of a phased retirement.
Buz Livingston is a certified financial planner. He operates Livingston Financial Planning Inc. focusing on hourly financial planning and investment management. Contact him directly at 850-267-1068 or at buz@LivingstonFinancial.net.
