Tom Brady, Great Resignation and the Risk of Retiring Early

Much ado was made about Tom Brady retiring from the National Football League recently with a record number seven Super Bowl titles and most all-time wins. Truly, no small feat and a great accomplishment for the 44-year-old.  However, he is still six years out from receiving an AARP card. So, should we worry about #12’s retirement?

Tom looks to be in fine shape financially. After all, he leaves as the NFL’s highest earner with about $293 million earned over his 22 season career.  From now on, Brady will have endorsement income and will likely be offered employment by one of the NFL broadcast shows, following in the footsteps of other leading quarterbacks like Aikman, Bradshaw, and Romo. So, Tom Brady should be just fine retiring from the NFL, but how is the outlook for the rest of American workers?

You have likely heard about “The Great Resignation,” people leaving jobs, some for new positions, others opting for earlier retirement.  A record 4.5 million Americans voluntarily left their jobs last November according to the Bureau of Labor Statistics.  It is not hard to imagine why some may decide to retire sooner. The upheaval of the pandemic was stressful and life-altering for many. Some had to care for children or parents and/or risk exposure in their jobs, causing them to rethink their priorities. All combined to cause workers to leave the workforce. And, the decision to retire was likely made easier for some, considering the higher value of their homes, investment assets, and retirement accounts.

Laurence J. Kotlikoff is an economics professor and author with a distinguished career studying and writing on topics relating to financial security and retirement. Kotlikoff recently penned an article, “A Harvard-trained economist says ‘early retirement is one of the worst money mistakes’—here’s why you’ll ‘regret’ it”

You can judge by the title that Professor Kotlikoff thinks early retirement is a bad idea for most Americans. He cites:

  • Almost half of the baby boomer generation (76 million people born between 1946 and 1964) have little, if any, savings with a median wealth of $144,000, which amounts to about three years of average household spending.
  • Only 1 in 3 have a Pension outside of Social Security.  Social Security’s average benefit – $18,000 per year.
  • And, two-thirds of people — between ages 57 and 66 — choose to retire early despite having saved next to nothing for retirement.  These stats combined with the fact that half of 50-year-olds will live beyond age 80 add up to a savings deficit for most Americans.

According to a Boston College Center for Retirement Research report, half of today’s working families risk a significant living standard decline in retirement. If they were to retire two years later, they could reduce the decline by 50%.

Americans are great football fans but not so great savers.  Indeed, most will never have the earning potential of an NFL football star, but saving more and retiring later will improve their outlook for a better retireme

Tim Waterworth

More about the author: Tim Waterworth

Tim is licensed as a Registered Representative with Kestra Investment Services, LLC, and an Investment Advisor Representative with Kestra Advisory Services, LLC. He holds himself to a fiduciary standard, which means he is obligated to put the best interests of his clients first.