Retirees, Idle Hands Are a Debtor's Tools

Retiring young may resultin having too much timeon your hands, especiallywhen you are used toliving the demanding lifeof a physician. The following are cautionarytales of young retirees, wholooked to investing as a way to passthe time. Three of the four retireesdescribed below can agree that toomuch free time can be a bad thing.They retired young, made risky investmentsduring their free time, and whittledaway their nest eggs. One of thefour retirees was forced to return towork. One took his own life after hetraded away his entire retirement savingsin the stock market. The namesare fictional, but their stories are true.

Hyper Traders

Dick Suly knew he had a problemwhen his wife came home from workone day, saw him at his computer tradingstocks, and told him that she wouldpay him to stop. Suly was only 45 yearsold when he stopped working at thebrokerage firm he founded and owned.Initially, he traded small amounts ofmoney in the stock market to pass thetime. Soon after, he says, "I acceleratedthe amount of money at risk because Imade money earlier." Suly's stock tradingsuccess fluctuated over a 6-monthperiod, losing more money than hegained. He is now working at a nationalbrokerage firm to compensate forsome of his losses.

John Sutcliff wasn't so lucky. Hewas 50 years old when he retired witha respectable pension from a telecommunicationscompany. This was themoney he used to day-trade stocks at amajor brokerage firm. One year hewas featured in the firm's annualreport as a "pin up" hyper trader. Atthe time the photo was taken for theannual report, he had lost so muchmoney that he was forced to live in arented apartment. That same year, hecommitted suicide.

Unlike the other retirees, DonaldKelter didn't buy and sell stocks topass the time after retiring at age 50.Instead, he invested in speculative limitedpartnerships to fill his days, and helost money in these ventures. However,because his company payout was over10 years, he still had money to livecomfortably once he curtailed his speculativeventures.

The last retiree, Lyle Price, was 53years old when he stopped working asan executive at a bank. He started buyingoption calls for amusement whenthe market went down and selling coveredcalls (not naked) when it went up.This method of trading continues towork for him, and he has been able tosupplement his retirement income withthese monies. His method of trying toearn extra money is less risky than theavenues taken by the other retirees.

A Common Pattern

Losing financial ground duringretirement is not something any physicianwants to do. Yet, three of thesefour people who retired early lostmoney soon after leaving their jobs,because they were using risky moneymaneuvers to pass the time. This activityis a recognized pattern amongyoung retirees that has enormousimplications for their future wealth.

Terrance Odean, global investorand assistant professor of finance atthe Graduate School of Managementat the University of California, Davis,says that people do trade stocks to passthe time. He refers to this activity astrading stocks for entertainment.Odean found that the cost of tradingovercomes any gains when trading isfrequent, so the trader loses money inthe end. Investing is not a game andshould never be taken lightly. If youare a retiree who feels the need to playthe market to keep from being idle,maybe you should just go back towork instead.

Shirley M. Mueller dissects barriers to effective

monetary decisions so they become

manageable. Her unique training and experience

as a practicing physician, board certified

in neurology and psychiatry, combined

with her 7-year investment advisor career, contribute to her

expertise. She welcomes questions and comments at

MyMoneyMD@aol.com.