A former NFL player reminds us that the retirement crisis doesn't just affect everyday citizens, but also athletes, many of whom are no longer wealthy.
CNBC reports that Mario Henry, a former New England patriot, "was out of football, and money, by age 28." Now Henry is drawing attention to the retirement crisis, citing a Sports Illustrated report that approximately 80 percent of retired National Football League players go broke in their first three years out of the league.
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Henry says in the report, "The average working person asks, 'How is that possible?' That's a fair question, because the average NFL player's salary is close to $2 million per year. The median income is $750,000." But while there are a variety of reasons, "at the top of the list is a lack of financial planning and education."
Not understanding budgets, receiving poor advice from "agenda-driven agents who weren't properly screened," being unwise enough to sign powers of attorney for agents and thus losing control of their money—the reasons young players end up broke are many. And they tend to stay broke, since they haven't prepared for a day when the millions might run out.
But that's only a part of the big picture, says Henry, who says athletes' financial woes point to a broader "retirement problem, largely due to inadequate knowledge, poor advice and lack of preparation." In fact, athletes' money issues could be a microcosm of the problems experienced by the broader population.
With 88 percent of Americans afraid of a retirement crisis, and 60 percent behind schedule in what they need for retirement savings, according to surveys from the National Institute on Retirement Security, Henry says that "many Americans are not planning for the fourth quarter of their lives for those worst-case scenarios, and some who believe they are prepared may have a false sense of security."
He goes on to highlight the usefulness of home equity as potential retirement income, although that income isn't easily accessible—and without planning, that income is out of a retiree's hands.
Then there's the need to plan for emergencies, and he warns that people should not be satisfied when an advisor tells them how much money they should have when they've stopped working. "Wall Street has absolutely zero to do with you having enough life-long income," he says, adding, "Pensions are disappearing and now the middle class has to gamble on the stock market."
And few consider such emergencies as a life-threatening illness, a growing inflation rate and even their own life expectancies when figuring out how much they should need.
He also warns about the need to consider withdrawals of retirement funds in light of possible other sources of income, complex and possibly punishing tax outcomes and the lack of understanding most people have of required minimum withdrawals.
Henry concludes, "We have a retirement crisis in this country in which the current financial methods in the near future will possibly fail millions of people. There are going to be millions of people who will run out of money in the very near future unless they open themselves to new ideas."
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