Seven Suggestions for Tom Brady Before Retiring

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Planning Ahead Can Help You Live Your Life on Purpose.

The day before the AFC and NFC Championships were played on Sunday, ESPN broke the news that Tom Brady was retiring from football. Although, by the time Sunday night ended and football fans knew that the Los Angeles Rams and Cincinnati Bengals would play each other in Super Bowl LVI it was reported that Brady told the Tampa Bay Bucs he’s still not sure what he will do next year. He subsequently has confirmed that he is retiring, and many would argue at the top of his game. In his last year playing, he led the league in passing yards, passing touchdowns, and completions. He's won 7 Super Bowl Championships and is considered by many to be the best quarterback of all time. Impressive, and especially impressive for an athlete now in his 40's. 

When planning for retirement, whether you’re a decorated NFL quarterback or not, believe it or not, similar concerns can arise. Planning ahead can spell the difference between a successful retirement with enough money and being in a healthy mental state, or a stressful retirement with difficult decisions and limited options. 

As such, in a nod to Tom Brady’s seven Super Bowl rings, here are seven suggestions that anyone contemplating retirement should think about.

1. Are you going to work after you retire? Your retirement might not actually be retirement, it could be about doing something different or substantially less hours. For you, this might mean you take on part-time work, perhaps in the industry you spent decades in, or in an entirely different field. It might bring extra money, it might include medical insurance, help offset travel expenses, and can also keep you engaged. If this is what you want, then factor it into your plan. Maybe you look into setting up a consulting business that is also advantageous for tax purposes? Hopefully, if you decide to work, it’s because you want to, not because you are short on income. That’s where the strength of your regular savings and investing comes in.
2. What happens if you get really sick? No one likes to think about it, but a major illness can cause plans to substantially change. You need to consider what will happen to your life if you are incapacitated or you need to live substantially different. Medicare doesn’t cover all your health-care expenses, like nursing homes. There’s a good chance that you need to pay for uncovered extras. What would you do if that occurs? How might this impact your family?
3. Where do you plan to live? The place you spent your working years may be too costly in retirement or you may want to live closer to children or grandchildren. Plenty of lists exist of good locales to move to. What if you owned a business that didn’t do as well as you planned, and you sold it for less money than you expected? You could move to a less expensive state, where you could continue to live as comfortably as before. Uprooting your household might cause you some inconvenience, but maybe not so much that you have to seriously change your lifestyle. Many retirees use retirement as the time they can now live exactly how and where they want to live. 
4. Understand Social Security. The goal with Social Security may not be to get the most you can from the government in your lifetime. It is to optimize the amount you receive per month when you finally retire. The earliest age you can start Social Security is 62. If you retire at 55 or 60, then you might want to claim it as early as you can. But if you plan to work past 70, there is no reason to take Social Security before then. Doing so reduces the amount you can receive at your full retirement age (67 for workers born in 1960 or later). You can have a very nice bump in your benefits every year you postpone taking Social Security (about 7-8% per year). That bump is often a better deal for you than starting early and taking the most money you can.
5. You’re very likely going to feel awkward not working. Not going to work every day takes some adjusting. You might feel lonely or that you aren’t living your best life. Your phone is more than likely going to ring much less. The people you spent tons of time with at work might just fall off the map. You might feel that your importance has diminished. It’s called the retirement blues. You might think you are prepared for all those newly empty hours, but a lot of retirees are not. This is something that really happens. How might you plan for some of these thoughts bouncing around in your head? Who or what can you do to combat this? New hobbies and friendships?
6. Timing could make or break you. If the market melts down in the first few years of retirement, you likely will have much less money than you planned, and you might have to spend your nest egg faster than you expected. It is only good planning to stress-test your finances by assuming you lose money at the outset of retirement. Do you have an adequate amount of cash set aside for such an event happening? 
7. Have a Financial Plan. You need one to prepare for the best, and the worst possible outcomes. Part of that process is scenario analysis that gives you an idea of how much you stand to lose under the worst case. Test your portfolio to make necessary adjustments. You might decide to postpone retirement, or to change your retirement lifestyle. “Doing” a financial plan once is not enough, it needs to be updated regularly to go through the various stress tests. Think of a 'financial plan' as a verb and not a noun. 

You may be close to retiring, but it doesn't mean that your planning stops, in fact it can become more important than ever. Talk to your financial advisor to make sure you are accurately planning for retirement, whatever that looks like for you, so you can sleep better at night. Especially on Sunday nights if there is no football for you.

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-Paul R. Rossi, CFA