6) He has been notoriously thrifty, living on $25k a year and driving a used car (2). So would imagine at some level he has been planning this outcome, or leaving option wide open.
Regarding mathematics as a career and his outlook on the financial issue -
"I have a bright career ahead of me in mathematics. Beyond that, I have the means to make a good living and provide for my family, without playing football. I have no desire to try to accumulate $10 million in the bank; I already have more money in my bank account than I know what to do with. I drive a used hatchback Nissan Versa and live on less than $25k a year. It’s not because I’m frugal or trying to save for some big purchase, it’s because the things I love the most in this world (reading math, doing research, playing chess) are very, very inexpensive."
That is the secret to happiness as far as I am concerned; measure your days by how much you've learned not by how much you have earned.
Yet the vast majority of the time, this sentiment comes from people who are well-off, e.g. someone with an MIT PhD and an almost impossible-to-screw-up future.
There are at least two possibilities. Either people who aren't well-off are just sour grapes, or they deal with a lot more than a lack of proper mindset.
The secret to happiness is no secret: if you have more money than you know what to do with, you can cover the vast majority of cases that will make you unhappy. If you, your children, or your pets get ill, you can get them proper medical care. For someone who lives on $25k/yr, that will almost always end in disaster.
I think it's not productive to pretend like money doesn't equate to happiness. The lust for money can do a lot of damage, but simply realizing that money is incredibly important to happiness is a realization that most people don't make. They spend extravagantly when Christmas comes around; they eat out because they want to "feel like a normal person," i.e. someone who can afford to eat out; they get expensive birthday gifts for family members. And why? Then when a financial disaster comes around, like someone getting ill with no insurance in the US, there are no resources left to deal with it.
I don't know. It's just far too easy to feel like there's a key to happiness waiting to be discovered. It's a multi-faceted and complex issue.
I live in a post-Soviet country - maybe one of the best in terms of GDP. Compared to the US it's basically the opposite end of the spectrum in terms of how much money you need to live - healthcare is free, you can rent an ok apartment on not much more than minimum wage, unemployment is below the EU average, transport is cheap (and public transport is good), food and entertainment isn't expensive.
Yet people still like to complain about how everything is too expensive and how they have no money. People here are miserable and we have one of the highest alcohol consumption and suicide rates in Europe.
I'm not really sure what point I'm trying to make, but as you say happiness is complicated. Giving everyone $X/year more isn't suddenly going to make them happier.
I really like this response, it gives tremendous insights into the person. I'd like to unpack it a bit though and perhaps provide some food for thought.
Starting in the middle:
> I think it's not productive to pretend like
> money doesn't equate to happiness.
That quote and this one:
> Yet the vast majority of the time, this sentiment
> comes from people who are well-off
Ties the notion of money to happiness.
It would be great if it were that simple, but it isn't. All of the studies show that once your basic needs are met The correlation between money and happiness essentially goes away. And part of the problem is being imprecise in our language, because their is 'money' which is to say "gee you're pulling in $10,000 a month!" and there is 'wealth' "gee it only takes 10% of your take home pay to cover your rent!"
Many people who work in the STEM sector of the market, will have their basic needs met. They will all have individually varying levels of happiness that are not well correlated with their individually varying levels of wealth. You'll meet them, people who are "rich" and miserable, people who consider themselves "middle class" and are totally happy.
And I assert there is a key to happiness in this uncorrelated range of wealth.[1] That key is to define your happiness in something you have complete control over, rather than something that is externally influenced. Everyone I've ever met who does that is happier, more consistently, than people who don't do that. It doesn't have to be learning like it is for me, I know people who are very happy and measure their days by how many people they have helped.
It is my thesis that everyone has some internal notion of their "score" in life, and once their survival needs are well met (food & shelter) their happiness is entirely a function of how much they are 'scoring' versus an arbitrary benchmark of what a good 'score' should be.
[1] For the literally minded we'll define this uncorrelated region as that level of wealth that starts just above 'I have enough incoming capital to keep from struggling to meet financial obligations' and below 'I have so much capital I don't have to work to meet my financial obligations.'
It's security. Money (currently a proxy for power) can provide you with the ease of mind that if you fall ill, if someone you care about is injured, then you can get them the best care, that you can take time off to help them. Similarly, it helps to feel as if you have people who are also secure so that they can be there for you too.
I think of it as, money can't buy happiness, but poverty can create unhappiness. I do think it's important for most people's happiness to get to a point where they can earn enough (at a job they don't hate) to never have to worry about how they're going to pay next month's bills or whether or not they can afford everything they need from the grocery store. Having to worry about stuff like that is a constant source of stress that wears away at whatever happiness someone does have in their life.
Beyond that level of income, whatever it is, people don't necessarily get happier, but they at least have more resources to work with. Depending on the person, and depending on whatever tradeoffs are made to get that higher income, they might figure out how to turn more money into more happiness, or they might not. That's more dependent on what makes an individual happy.
On the other hand, there are ways you can risk your health for money, where the reverse trade isn't possible for any amount of money. So, getting back to the article, retiring early seems like a good trade.
That's possible in some special cases, but it's also quite possible to ruin your health in ways that can't be fixed. And this is what football players are facing.
Always? No. Many health issues are actually incurable with current technology. For a simple example, many forms of hearing loss are incurable as far as we know. You can spend a lot of money on fancy hearing aids but it won't get you normal hearing again.
Old rich people can't spend money to cure all their ailments and be young again. Maybe someday, but not today. And it's not a gamble if there's no chance of success.
The vast majority of time you /hear/ it from people who are well off, as they are the ones who have their lives written about. There are plenty of happy, non famous/rich people. I should know ;)
Imputed rent doesn't seem like a strong concept here. If someone wants to imagine expenses, then they can certainly imagine that the player bought an annuity that pays his landlord the rent forever, so that imagining the imputed rent has to come out of his 25K is like double-counting the rent.
Even without owning one's own home, not all areas have high rent, even within the same state. California, for example, has a pretty big swing in rents between the Bay Area and even Sacramento, let alone somewhere further north or south in the Central Valley.
Keep in mind that he's an NFL player, so he's in the offseason for most of the year, so he can live pretty much anywhere he wants. During the season a large portion of his costs are paid for by the team (hotels, meals, etc.).
I can definitely believe that as a football player he can get by on less than $25k of his own money.
Good point. In most of the US, a decent 2-bedroom apartment can be had for <$1,000 / mo. An apartment that would be considered quite large by international standards.
Sure, but imagine a stereotypical American family with three kids, two cars, maybe a dog, and both parents working professional jobs. I don't see how you could consider it abnormal for them to spend $2000 a month to rent a house in the suburbs. If you're talking "globally normal" that's one thing, but by that standard nearly everyone within a thousand miles of me is in abnormally large and expensive housing.
> Sure, but imagine a stereotypical American family with three kids, two cars, maybe a dog, and both parents working professional jobs. I don't see how you could consider it abnormal for them to spend $2000 a month to rent a house in the suburbs.
That's a massively expensive and large house for the stereotypical American family in the majority of the country.
(They're also not going to be paying 2K to rent a house in the suburb, they're much more likely to be paying off a 200K mortgage, looking at the median US home price as well as the median in areas like Dallas, Atlanta, Charlotte...)
If you're paying a lot more than that you're either abnormal in terms of "spending way more than most / you have to" way or abnormal in the "you live in a super expensive area" way.
Let's suppose the median monthly rent in America was $1000. (It's actually $959 as of 2015, according to google.) Would you be shocked to find out someone was paying $500 a month? I mean, that's on the cheap side, but I wouldn't exactly call it weird, especially when they're probably living in rural Nebraska or something. Given that, why is it so shocking for someone to go the other direction, by the same factor?
> but by that standard nearly everyone within a thousand miles of me is in abnormally large and expensive housing.
Speaking from another side of the ocean, it's really true.
According to the statistics about energy used per capita, it's some oil producing lands and the US. And that even doesn't count all the stuff that ends on the US landfills.
i get out plenty. my apartment is even under market. i don't live with roommates. there is literally no way to get an apartment anywhere close to 50% cheaper by yourself in the market i am in. my experience is perfectly normal here.
even in my previous city (a major US city), my rent was only 50% less than it is now. and in that market it would be equally as hard to find one at 50% of that price.
if you live for a quarter of what i currently rent, then you must undoubtedly live with roommates or live in a not so great place (which is fine) or both, all of which i consider being frugal, which he stated he wasn't. or you simply live in a completely different market.
No roommates, just a different market. I live in Minneapolis which I do consider to be a great place. That said, the vast majority of Americans live in "different markets" than what you've described, so you might do well to understand how 24k/yr in rent is not normal for most people.
i suppose the disconnect happening in the replies is that people assume i meant normal in my rent amount. my original comment was meant to compare what an nfl player, with a family i might add, supposedly lives off of in entire year to my, me being a middle class single person, yearly rent (whether that rent is high or low or normal). so sure, he and many may live much cheaper. but cheap enough such that his taxes, utilities, food, family care, general bills, purchases, etc. all still add up to $24,000. i doubt it without heavy caveats to that number he gave.
I believe it. If he owns everything free and clear--I'm betting he does--and he avoids big purchases and fancy trips, he can basically get by on purchasing nothing but food, electricity, phone, and gas. Tack on some clothes and reasonable eating out, and you can live well on $25,000 per year. Everything else was probably paid for by the team.
During the season and much of the off season the team probably pays for accommodations, meals, transportation, healthcare, etc.
Also, this is Baltimore we're talking about. The only places you can reasonably spend that much in rent in Baltimore is luxury developments on the waterfront and around Patterson Park.
At least in the USA it is in no way FU money unless you are over 60 or something. Assuming you invested it all and didn't spend a single cent, that's 12K a year from interest (generous 7%). You can probably spend 30-40K for 30 years if you decide to dip into the principal. But if you are young, you will have to get a main income source.
"Safe withdrawal rate" is usually pegged at 3.5% to 4%. On an initial lump sum of $1MM, that's $35K-40K/yr, not $12K per year. (I'm not sure where the 7% came from in your post.)
You can login as HNHN : HNHNHN and look at the scenario I modeled using the information in this thread. That has a 100% success rate from now until 2080, assuming a 3.5% annual spend ($35K to start) AND ignoring any new money being added (from his mathematics or other work).
It's not Maserati money perhaps, but it's absolutely a secure retirement for someone currently living on $25K/yr.
> On an initial lump sum of $1MM, hat's $35K-40K/yr, not $12K per year. (I'm not sure where the 7% came from in your post.)
The original poster calculated the value off the $1.8MM (not the tax-deductible number), and simultaneously made a place value error ($12k/year is 0.7%, not 7%, of $1.8MM).
You put a decimal point in the wrong place. 7% of 1.8M is 126K, not 12.6K. Really it would be more like 77K from 1.1M once you factor in taxes, but for most people that's more than enough to live on without ever touching the principal.
> and how much do you think MIT professors are paid?
Depends a lot on department and situation. Course 18 (math) doesn't pay that great while course 6 does. If you have a chair you can pay yourself more; if you take a non-academic role (dean, provost, department head etc) you can get more. Even when you have tenure you get reviews and raises just like any other job.
Point of reference: my gf's ex is a tenured prof in a non-engineering field. B/c child support etc I know what he earns. Adjusted for inflation, my summer consulting gigs (before the 1980s AI winter) earned me over 50% of what he makes all annually including his own summer consulting. I'm sure if he were in computer science he'd make more in a month than I would have made all year.
Full professors at MIT on average make about $186k [1]. Assistant professors average around $124k [2], with considerable variation (I'd guess the full professors also have considerable variation).
People generally don't retire to $25k/year, especially if they eventually get married and have children. The only way to really make something like that work is to move somewhere extremely inexpensive like SEA. That's unrealistic for most people.
This is the one thing that has always struck me as odd abut the FIRE community. FIRE is a good goal but it's highly abnormal for people to retire early with these very low annual salaries for themselves. Sure, it works if you're a single childless 30 year old. But you also generally have to be comfortable staying single and childless if you're going to "retire" to $25k/year.
There are a lot of areas of the U.S. where people actually do retire on $25K/year. Having said that, they probably own their home, have cheap Medicare and have paid all child-related expenses at that point. So you're right, for most 30 year olds it's a different story.
Also, even if people budget a $25K/year retirement there is always the possibility of needing long term nursing home care in the last years of life. (Say, if you're a football player that suffers dementia later in life.) Depending on the quality of care, that can wipe out even a $1M nest egg. It's a big financial concern at that age. It's not covered by insurance the way that, say, a heart attack or stroke is.
Yes, I don't mean to exclude those people. Both pairs of my grandparents had a fixed income of less than that. But as you said, they didn't have many personal expenses beyond bills and food.
Well, he may not have every option in the world (e.g. he can't simply move to San Francisco and hope to have a nice life without working), but he does effectively have his own personal basic income, and it's a significant amount. Right now, I couldn't imagine the additional freedom I'd have if I had ~$30-40k coming in every single year, regardless of what I did for work (if anything).
That's enough to live on and do those things you would do that only requires you. If you ever want to leverage something into a larger undertaking, that requires serious capital rather than a basic income.
Unless you're a billionaire there are always going to be things you can't afford to do. For many if not most people, having enough passive income to live without having to work would be a dream come true.
If he put $1M in a bond fund, he could probably expect to get around $40k a year on the interest alone. He would only pay 10% capital gains tax on that, which would leave him with $36k. Well above his $25k yearly budget. The bachelor lifestyle is cheap.
Hell, he could put it in a municipal/tax-exempt bond fund and at the very least not pay federal taxes. If he lives in a state that has a state-specific bond fund, he could let it grow tax-free. 3-4% on one of those is not unreasonable. (But he'd probably want to diversify a bit...)
Not to mention the NFL pension on top of that. Not sure when he can draw it (at retirement, or does he wait until 55/60/62/65?), but even just modest investment returns + pensions puts him above the median US household income.
He's set for life if he keeps his expenses at $25k/yr. $1.8MM / $25k = 72. Even if he loses half to taxes, that's still 36 years worth of expenses in assets. If I had that much, I'd retire in a heartbeat.
On the cumulative salary of $1.8m over three years he's looking at an effective rate of around 35%. But he definitely won't lose half of his pension to taxes. That's one of the main advantages is that is spread out over a number of years. The NFL, with all its faults in neglecting players health, was wise to set players up with pensions.
Doesn't the average NFL player have a life expectancy of 53-59, and you can only collect the pension after 55? They can move it foward starting at age 35.
"A lot of money" is also known as "Fuck you money". Enough money that you can say "fuck you" to anyone without worrying about the consequences.
$1M is not even close to that, especially not for a young guy who has to pay for the next 60 years of his and his family's existence.
Don't get me wrong, it's a good starting point, and you can definitely be reasonably secure on it if you invest wisely and continue to work (e.g., buying a reasonably-priced house in a stable neighborhood and staying in it long term; this will take about 1/3 of that $1M, btw), but it's not enough to be truly independent. A single serious lawsuit will easily drain $1M, for example.
It's not about being "consequence proof", because as you note, it's never possible to avoid the consequences of one's actions. It's just about being independent.
An independent person does not need the goodwill or approval of any other person or small group for their well-being or prosperity. If you are ever going to need a paycheck again, this is by definition not you.
Independence ("fuck you money") is about being able to be honest with anyone, even if it means giving a measured, well-deserved "fuck you", without having to worry that your ability to feed and clothe your kids will be jeopardized. It's not about being above the law or anything like that.
Well he's only a student so somewhere between $30k and $40k, maybe a touch more if he gets a fellowship.
Also, how much professors make varies quite a bit. An engineering professor might make $100k from the university. If they are particularly motivated, you have professors who write books, play key roles at companies, consult, or give expert testimony. They can make quite a bit off those secondary activities but it isn't automatic.
Each contract is individual, but generally, endorsement contracts have a lot of termination clauses, so Bose could and will end the deal soon, unless Urschel's brand is so unique (MIT math PhD and NFL player? Nothing like it) that they decide to keep him on.
I think MIT math PhD former NFL Player has just as much marketing power as MIT math PhD backup center. So I could see Bose keeping it for a year. He probably has more star power announcing his retirement than all of his NFL career so far.
> 4) He was at end of his rookie contract, next year would be the "in the money" year for him so he is clearly leaving a lot of cash on the table.
The lifetime pension really helps, but if I were him, I would have stuck it out to see what I could get for my new contract. The rookie contract is low because of the changes made in the last CBA. His post-rookie contract could have netted him tens of millions.
But I'm greedy and would gladly sacrifice my health for a $40 million contract.
1) 3 years of service vests into NFL pension plan, he just hit qualification - value pegged at $21,360 a year for life (3)
2) He has not publicly commented on his retirement or reasons for it.
3) He has a hugely awesome secondary option - doctorate of math at MIT
4) He was at end of his rookie contract, next year would be the "in the money" year for him so he is clearly leaving a lot of cash on the table.
5) Over three years he "only" earned ~$1.8m http://www.spotrac.com/nfl/baltimore-ravens/john-urschel-145... - which after tax is 7 figures but still not a lot.
6) He has been notoriously thrifty, living on $25k a year and driving a used car (2). So would imagine at some level he has been planning this outcome, or leaving option wide open.
(1) https://www.washingtonpost.com/news/early-lead/wp/2017/07/27...
(2) http://www.baltimoresun.com/sports/bs-sp-ravens-john-urschel...
(3) http://firstquarterfinance.com/nfl-pension-plan-retirement-p...