‘Sauve qui peut’: Is Covid Driving the Unwise to Early Retirement?

‘Sauve qui peut’: Is Covid Driving the Unwise to Early Retirement?

As Napoleon’s great army, hard as iron and brittle as volcanic glass, teetered between near-run victory and ignominious flight at Waterloo, impending disaster was signaled by reedy cries of “sauve qui peut!” Save yourselves!

You hear those words – it’s time to toss the musket, hang on to your plunder and flee toward Paris. Or so says the losing side.

Yes, the pandemic recalls the great battle, fought some distance from the eponymous town – at least to me. Most everyone is hanging tough today, particularly healthcare workers and EMTs, who are getting the lion’s share of credit. When will they hand out the medals, I wonder?

Not everyone has equal staying power. In pandemic life, as in mortal combat, an unsteady few stray from the front. Reports now say that many older Americans – tired of struggle, weary for repose, even if more parlous than planned – are retiring. Early retirement comes at a price, yet many are paying it.

As your sergeant at arms, I declare understanding. Still, it’s a course I cannot readily counsel.

These actions reflect small dishonor on those stressed beyond limit, but I fear they are undermining resolve, even among the stout-hearted. That’s how it ran on that humid, thunderous day in 1815, so before your mind strays to abandoning the fields of labor, first consider the words of this stout (literally) office grognard standing in your path.

Here’s what’s happening – as best as I can tell from preliminary data. One study shows that, since the first lockdown in March, nearly three million employees aged 55-70 have abandoned the workforce. The Bureau of Labor Statistics sees 16% fewer workers in the age 65+ cohort employed today. Older workers are leaving via furlough, layoffs or voluntarily, and a large proportion, still not accurately measured, are taking the opportunity, if it is that, to retire early.

A friend has done so and provides his explanation: he’s rich and wants to work on his screenplay (coming to a cinema near you, which may be closed due to lockdown restrictions; *sigh*). Fair enough, I guess. But, really, he’s rolling in livres and lucre. Not the best example.

Other senior employees may be wondering whether it’s worth bothering to find new employment merely to struggle on a bit longer and top-up Social Security and retirement plans. No suspense needed: unless you’re my friend Croesus, it definitely is worth it. Advisors and agents should be working their phones to get this message across, because retiring early without proper care can be dreadfully costly.

We concede that some have no choice, but changes to long-drawn retirement plans should never be made lightly, to say nothing of action in panic. Let’s say you’ve been shuttered or downsized by the pandemic. An emergency arises, and you must raid the IRA. This comes at a penalty – you lose future growth – but there’s no choice, you feel. I get it. But I can’t recommend it.

Perhaps one files for Social Security benefits earlier than planned – age 69, say, instead of 72. This will impact your benefits for as long as you live, and the same goes for a filing spouse. So don’t take this step lightly: a savvy advisor should know tricks to help minimize the damage. Expert consultations first, please.

Raiding retirement funds often raises tax consequences, too. While there may be no choice, assess the ultimate damage before making precipitous moves. As always, your advisor is ready.

In providing this advice, I’ve been accused of sanguinity. I don’t understand desperation, they say. Well, let’s start with 1998 – the crisis in Russia. Touted as the greatest single-country loss of wealth in recorded history, the ’98 crash was devastating, and I saw it firsthand. Most foreigners fled, suddenly jobless, while Russians stood to their guns. What else could they do?

Heedlessly, I and others stayed on, living on bread and macaroni, the only food on suddenly bare shelves. The government estimates the crash killed 750,000 people – cold round numbers were all they could glean. But the recovery was something to behold: it transformed Russia into a modern nation. Those who had run slunk back or forever regretted impulsive retreat. Money was made; lives rebuilt; and it all happened so quickly. If only they’d waited, stood firm…

Hark – can you hear the cannons roar? That’s the 2008 overture. By then my career had crawled from the basement to the top floor – the JP suite, if you follow. My older brother Paul, astonished at Young Feckless, conceded that I was probably the best-paid Lavrakas in our family’s history (excepting those Golden Horn merchants, their ledgers long lost). I felt pretty good about it.

Down plunged the avalanche! The Global Financial Crisis cost me – and you’ll forgive me for sharing – a wife, a dog, a Manhattan apartment, the bulk of my investments and the last of the black in my fine curly hair. Bit of a pickle, it was.

What would Bonaparte do, that inspiring fiend? En avant – a outrance! I moved to Portugal, helped set up a surfing school and an offshore advisory; I engaged in mortal combat with brazen EU visa officials. It became too much, so I called in favors and moved back to Moscow. I was happy for three years, the best of my professional life. Then, still one crisis more.

Not many noticed the 2012 crisis, I think. Subtle, silent; investors and analysts all looking away. Few cared, tired of corruption and sanction concerns; besides, sexier emerging markets beckoned. Down came the walls, and out we all went – dispatched from the cannon again, human grapeshot. I ended up in Singapore, for goodness sake, and came to love Asia, a fresh market. Then – oh, you can guess it.

The story goes on, but let’s skip to the lesson: I’m talking mainly to those still planning retirement. Don’t let anyone fool you: crisis is normal. The pandemic will end, but I see smoke on the horizon – always there, roiling away. Whatever will we do?

Don’t practice fear: get prepped instead. Reexamine the value of life insurance. Term life is grand in its way: simple, affordable, ever dutiful, if inflexible. Permanent life policies are better in a crisis. Whole, universal and variable universal life all feature cash components that can be withdrawn or borrowed against in a pinch. The cash portion can be used to pay the policy’s premiums, keeping it alive under strain. The longer these policies are held, the lesser the penalties for withdrawals. No solution is perfect, but this one is proven under fire.

Bonaparte said that his Grande Armée, which he led to destruction in Russia, comprised three sorts of men: human, iron and bronze. The humans all died; the iron cracked and were captured; the bronze, resilient and true, survived to come home.

I am not bronze; he said nothing of tin. Yet here I am, a survivor and lecturer, harping always to keep cool, carry on, and plan it all out: rationally, with an eye to history. Like your life depends on it. The trials by fire will come; when others run, stand firm. You’re hardly alone in the fight.

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