Retirement Planning Failure - How A Retired Senior Manager Went Broke In 5 Years
by Samson Itoje
My ex colleague once told me how his father (who was a senior manager with a national company before his retirement) went broke within 5 years of his retirement.
His father's story is a classic example of how retirement planning failure can lead to early death.
My ex colleague who we will call Frank, lived a pretty good life as a young man.
His father was a senior manager with a prosperous national company. That meant that . . .
>> The father had a fat housing allowance
>> The entire family (father, mother and children) had 100 percent free medical care
>> The father drove an official car paid for, maintained and fueled by the company
>> Their giant diesel generator was paid for, maintained and fueled by the company
>> The father enjoyed free lunch at the office and
>> The father enjoyed yearly productivity bonus
The family enjoyed a lot of free stuff and lived a lucrative life . . . all paid for by the company where he worked.
A Senior Manager Starkly Unprepared For Retirement
Frank's father is a good example of a senior executive who had it so good at his job that he forgot that he is not the founder and CEO of the company. And, therefore, his salary was not guaranteed for life.
As expected, retirement came knocking.
When he reached the retirement age, it suddenly dawned on him that he had nothing to retire to.
>> He had no side business that he could retire to and
>> He did not invest massively in anything productive during his entire career that could finance his retirement life
Realising the dilemma he faced, Frank's father approached the company's CEO and requested that he be allowed to stay an additional year working for the company to give him time to establish something he could retire on.
His employer agreed.
Frank's father was happy.
However, the year moved pretty quickly.
At the end of the one year grace period he was given, he found his private business endeavours outside the company was still not delivering any reasonable profit he could retire on.
Again he went to the CEO to request for one more year to sort things out. And again the CEO agreed.
Sadly, the second year of grace he was given ended again with his personal business endeavours still not delivering the level of income he desired.
Finally, he had to retire as he was sure the CEO would not grant a third year of grace since he was well past the retirement age.
We Have A Business That Would Double Your Money In Just 6 Months!
Frank's father retired and received a payoff of about $100,000.
He was glad he received enough cash to start a new life outside his paid job.
He reasoned that he could start any business venture with the cash he had and become successful in no time.
A couple of months after his retirement, he ran into a couple of smart young men who had a business idea that could double his investment within 6 months.
The deal sounded legit and the return on investment was juicy.
He was so sure the business idea would turn profit quickly that he put in $50,000 to finance the idea.
Unfortunately, about 1 week after he transferred the money to the young folks, they became unreachable.
He visited their business office to ask what the problem was. And he was shocked to find they had closed shop and disappeared into thin air.
Half of his retirement benefit was gone!
You Could Be Dead In 5 Years
The loss of half of his retirement payoff to fraudsters cut through the heart of Frank's father like a sharp sword.
What would he do now?
By the next day, he reached a decision: He would relocate from the big city where he lived (and where things were expensive) to his village where everything he needed to live a simple life was much cheaper.
His strategy was to set a tight retirement budget for himself (and his family) and live strictly within that retirement budget.
He reasoned that, with such a tight budget, the $50,000 retirement payoff he had left with him could last him for many years.
He called Frank who was then on his one year national service to announce his decision.
Frank listened to his father's tale of woes and why city life was no longer for him.
After he finished explaining things to his son, Frank pleaded with him not to make the move.
Frank said, "Dad, you're not a village person. You did not grow up in the village. And you hardly visit the village. Moving to the village to live among locals with whom you have nothing in common could kill your productivity and your will to live".
Frank's father wouldn't listen. His son was not in a position to decide for him what he should or shouldn't do.
After several back and forth trying to explain further why the move was a bad idea, Frank told his father plainly: "Please don't do this. You could be dead in 5 years if you do".
That statement ended the conversation as it really pissed his dad off.
Frank's father relocated to his village as he had insisted he would. And things appeared to be normal for a while as he ate what was left of his retirement payoff slowly.
Nobody knew what was going on in his mind as he appeared to be more serious and more pensive than when he was still in paid employment and having the time of his life.
About 5 years after Frank's father relocated to the village, Frank received a call and the message was simple but heartbreaking: "I'm sorry to inform you that your father passed away this morning".