Toronto Blue Jays starting pitcher Ramon Ortiz exited a game in the third inning on June 3, his eyes filled with tears.
But what could possibly reduce a professional baseball player to tears?
Ortiz, a 40-year-old veteran of the game, injured his throwing elbow—a Major League Baseball pitcher’s golden ticket to “the show.” MRI results have not been made public yet, but Ortiz’s body language gave an indication that the injury could threaten his career.
If Ortiz is your client and he is forced to retire, the hope is that after 12 years in the league and over $17 million accrued in that span, he has enough saved to survive on for the rest of his life. As his agent, you’ll be there to help him.
But let’s face it: Most of our clients are not professional baseball players and they do not make millions of dollars.
So what do you do if your client retires early?
Not only are they retired, but they are also expected to live longer. Have they saved enough? Do they have a pension or 401(k)? After all, the average life expectancy for men today is 79. That’s nearly 40 years worth of income needed! Even if they do retire at the typical retirement age of 65, your client still needs a decade and a half’s worth of income to maintain.
In retirement, it's not just about how much you have, but also about how you spend it.
Former New York Met and Philadelphia Phillies center fielder Lenny Dykstra made $36 million during his 12-year career. Unfortunately, after several failed business ventures, Dykstra filed for Chapter 11 bankruptcy in July of 2009.
Though multiple lawsuits put the former player in peril, each stemmed from unsuccessful entrepreneurial efforts that included the launch of a magazine and a failure to flip a $17-million home. Additionally, “the Dude” made superfluous expenditures on cars and jets.
So what’s the point, you ask?
The moral of this story is, spend wisely. It’s common for retirees to want to see the world, spoil grandchildren, or purchase that $60,000 Chevy Camaro they’ve always longed for. It’s your job as their trusted financial advisor and personal insurance agent to ensure they live a happy, financially sound life.
But we can’t force someone to hold onto a large lump of money and spend it wisely.
That’s where annuities come into play.
A retirement annuity can provide your client a guarantee of payment for as long as they live through twice monthly disbursements. Annuities might not make as much as stocks and securities, but they also won’t ever lose value either.
I don’t know about you, but a bi-weekly check for spending sounds a lot less tempting than a massive lump sum of cash. It may not be for everyone, but it’s at least worth having the conversation because no one wants to end up bankrupt and out of money.
Here’s wishing Ramon Ortiz a speedy recovery. And if he does indeed retire, then here’s to a successful career and a happy, fruitful life of retirement without worries.