The Plight of Former Wall-Street Professionals

Bloomberg is running a heart-wrenching story about a former Wall Street economist who is struggling to make ends meet after being laid off.

Don't know why, but I somehow find it hard to empathize.

Let's summarize:

The guy in question is 61 years old, i.e. close to normal retirement age. During the 8 best years of his career, he earned 500,000 $ per year. For the rest of his career, he made 100-150,000 $ per year. In total, his career lasted 30 years.

So you'd think he has a nice-enough nest egg to simply retire, right?

Wrong. His nest egg is 720,000 $.

Why so little?

Well, for a start, even though the article says he "predicted in a published report the recession that would end his livelihood", he unfortunately kept his money in high risk investments, and lost 70 % of it (don't know what exactly he did with his money: the stock-market dropped less than 70 %, and anyway: Which sane economist puts 100 % of his retirement savings into equity at age 60?). In other words, he still had a very comfortable 2.4 millon $ in early 2008.

Then, there's the housing price crash: He plans to move to Vermont to save costs, but didn't manage to sell his New Jersey house for the 899,000 $ asking price. Instead, he had to accept 775,000 $. That's 14 % less than the asking price. Not too bad, I'd say. And in addition, we learn that he had bought the house with a 244,000 $ mortgage in 1990. Sounds like he still earned a decent return on the house. So what is it again that he's complaining about?

But maybe the real problem is that according to Bloomberg, 500,000 $ a year is hardly a great salary: We are told such a paltry sum "provided scant cushion against prolonged unemployment or career upheaval".

Yeah, it's really tough to make substantial savings out of a gross income of only 500,000 $ (and in case you're wondering: His wife also used to earn an income before she was diagnosed with a chronic illness).

And in any case, earning a reasonably good salary comes with the downside of "locking you into a lifestyle": For example, when he got his high-paying job back in 1994, he went out and bought a new Jaguar, and remodelled the kitchen for 98,000 $.

And now, the poor man can no longer afford to buy books and has to go to the local library. And instead of eating out, the couple stays home and watches rented movies.

But the house they are renting in Vermont still costs 1,800 $ per month. Hardly a dilapidated shack at that price, I'd say. Oh, and we also learn that the only place where he takes risks these days is "at the poker table".

I don't know about you, but I don't feel particularly moved after reading this story. Must be because I'm cold-hearted, I suppose...