Why Billionaires Are Refusing To Retire | How Money Works

0:00Propel Fitness Water With Gatorade Electrolites, Zero Sugar, and Vitamins, Propel hydrates better than water to help you get the most out of your workout and get back to your best self. What propels you? Propel with Gatorade Electrolites. When you need to build up your team to handle the growing chaos at work, use Indeed Sponsor Jobs. It gives your job post the boost it needs to be seen and helps reach people with the right skills, certifications, and more. Spend less time searching and more time actually interviewing candidates who check all your boxes. Listeners of this show will get a $75 sponsor job credit at Indeed.com slash podcast. That's Indeed.com slash podcast, terms and conditions apply. Need a hiring hero? This is a job for Indeed Sponsor Jobs. This episode is brought to you by Pomolive. Family time isn't just the big moments. It's weeknight dinners, sitting around the table, everyone talking all at once. So when the plates are empty and the sink is full, use Pomolive Ultra. Pomolive's most powerful formula removes up to 99.9% of grease,

1:03leaving your dishes sparkling clean and the new convenient pump makes cleaning even easier so you can spend less time tackling dishes and more time together. Shop now at pomolive.com. Most people alive today will never be able to retire. Almost half of all American report having no dedicated retirement accounts at all. And rising living costs means that millennials will need more than a million dollars saved to retire comfortably. It's a bleak outlook for most people who will probably be working in some capacity until the day they die. But there are people with enough money to live several lifetimes in extreme luxury without ever needing to work again. And yet they still choose to work. Even at the expense of their health, their family life and worst of all, their own net worth. So what the fuck is stopping so many billionaires from retiring? Well, I held this war and I know about retiring. Yeah. Even with this children and leadership positions, it doesn't look like our note is ready to retire just yet. Age really isn't much of a difference. It'd be turned everything else I may get on.

2:04According to Bloomberg, the average age of a global billionaire is now 63 years old. And it's slowly getting older every year as wealthy people live longer and longer lives. Mill billionaires are slightly older as 63.7 years and female billionaires are on average 62.4 years old. Female billionaires have a longer life expectancy than male billionaires. But they still train younger because several of them have been the beneficiary of an inherited estate or divorce settlement at a younger age. Forrest has also now reported that there are no billionaires under the age of 30 that are self-made. All of them have inherited their wealth. As billionaires are getting older in richer, an ever-increasing number of them are also working well into their twilight years. You might think that they are just obsessed with accumulating more wealth. The mental state of billionaires who just need more is a factor that we will get too soon. But for some of them, they would actually be even richer if they just took a step back and enjoyed their wealth. A report by the Associated Press found that Donald Trump would be worth as much as $13 billion if he had just taken his $400 million inheritance in 1988

3:06and passively invested it into the S&P 500. That's a fortune almost double what he is estimated to have today by Forbes, even after the huge boost he got from the IPO of True Social. Love or hate the guy, you can't argue that he could have made life a lot easier for himself by just living off a passive investment portfolio. The world's richest man on the day that this video was recorded is Bernard Arno, who is still the act of chairman and CEO of the luxury goods company LVMH, despite being 75 years old, almost old enough to run for president if only he were American. That's 15 years later than when most people hope they can retire and only seven years away from the average life expectancy of the average Frenchman. Session planning has started to worry other investors in the company because the agent chairman has made it clear he doesn't want to step down despite the problems it's causing for the company. So it's time to learn how money works to find out the three reasons why billionaires refuse to retire. This week's lesson is sponsored by Hostinger, the world's fastest growing web hosting company.

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5:12The first reason that billionaires don't retire, even though they have enough money to last them several lifetimes, is that a lot of them are just as stuck working their job as you are. A study conducted by Chicago Booth Professor Steve Kaplan and Joshua Roth Stanford found that 69% of billionaires on the Forbes 400 lists started their own business. The remaining 31% of Forbes rich listers sourced their fortunes from inheritance, lucky investments, or through pay packages as top company executives. According to the Bloomberg billionaire index, Steve Balmer is currently the six richest man in the world. But he made most of his fortune without starting a company of his own. He instead worked as a CEO of Microsoft after Bill Gates stepped down. Balmer received billions of dollars of company stock for filling the shoes of Bill Gates between 2000 and 2014. And his role was considered so important that despite mediocre company performance during his tenure, he is now worth almost as much as Gates himself. The success of some companies relies heavily on the work of a few key people who are often also the founders who are billionaires on paper.

6:12If you start a business that becomes so successful, that you're staking it is worth a billion dollars, you still can't retire unless you have a way to liquidate your position. You can do this by selling your shares, either through an acquisition or taking your company public. You can also get your business to generate enough positive cash flow that you can pay yourself a dividend and live on the income stream and retirement. Or if you are very financially creative, you can use the equity you have in your company as collateral for a personal loan that you can then use to fund your retirement. Selling your equity in your company is the easiest option. According to data compiled by Morgan Stanley Research, and published by the Financial Times, the size of private equity funds that specialize in buying businesses from their founders has increased by 800% in the last 20 years. The other way to sell your shares is through an initial public offering. But then there will be lots of rules about how quickly you can sell off your shares. No matter who you sell your shares to, the general public or an investment firm, they probably aren't going to want you to quit the second you cash out. Which is why a lot of private equity deals will have earn out clauses with conditions

7:13around how long you have to work with the company at Propel Fitness Water. With Gatorade Electrolites, Zero Sugar, and Vitamins, Propel hydrates better than water to help you get the most out of your workout and get back to your best self. What propels you? Propel with Gatorade Electrolites. When you need to build up your team to handle the growing chaos at work, use indeed sponsor jobs. It gives your job post the boost it needs to be seen and helps reach people with the right skills, certifications, and more. Spend less time searching and more time actually interviewing candidates who check all your boxes. Listeners of this show will get a $75 sponsor job credit at nnd.com slash podcast. That's nnd.com slash podcast, terms and conditions apply. Need a hiring hero? This is a job for indeed sponsor jobs. This episode is brought to you by Pomolive. Family time isn't just the big moments. It's weeknight dinners, sitting around the table, everyone talking all at once. So when the plates are empty and the sink is full, use Pomolive Ultra.

8:14Pomolive's most powerful formula removes up to 99.9% of grease, leaving your dishes sparkling clean. And the new convenient pump makes cleaning even easier so you can spend less time tackling dishes and more time together. Shop now at pomolive.com. After you secure the bag, the reason Balmer was paid so much was because he was the only man in the world who could fill the shoes of gates as the head of the company after he stepped back as a role of the CEO. According to the corporate law from Reed Smith, the average earnout period is getting longer. And the average time that a founder needs to stay with the company after selling it is now between one and three years. So selling your shares will take time. Making a business cash flow enough to pay your dividends will also take a lot of time and it could mean sacrificing future business growth. If your company is paying you a dividend, it can't reinvest that money into R&D or acquiring another company. If you are the only shareholder, that's your trade off to make. But if you have other investors, they will put the pressure on you to keep the business growing. You could also use your company as collateral to take out a loan.

9:15This is popular with people like Elon Musk who have used his Tesla shares as collateral on loans to fund his purchase of Twitter and for additional funding for SpaceX operations. Oh, and you still have the small inconvenience of needing to repay your loan so you better get back to work. All three of your options are surprisingly slow. So most successful founders actually find it quite hard to write off into the sunset. Despite our perceptions of billionaire tech bro starting companies in their college dorm, the average company founder is already quite old. According to research conducted by the Harvard Business Review, the average age of someone who starts a successful company is 45 years old. Scaling a company to a billion dollar valuation took on average 5.5 years according to data from fleximize. But the median is much higher because most companies don't scale as fast as tech startups. Finding a buyer and going through due diligence for a sale can take more than a year as well. And with an earn out period, the average business founder is going to be almost 60 years old at their earliest opportunity to step away from their business. Those are the financial reasons,

10:16but it's also silly to ignore the psychology of wealth at the scale, either good or bad. So far we have assumed that you will need at least $1 billion in liquid assets to retire comfortably, but you obviously don't. Company founders that scale their company to be worth billions of dollars are going to receive several acquisition offers before they get to that point. Someone who becomes a billionaire from founding a business would have turned out offers to cash out for tens of millions or hundreds of millions of dollars. All life changing amounts of money for almost anybody. Someone who does that either believes in their company so much that retirement isn't even something they would consider or they are just so addicted to watching a number go up that nothing will satisfy them. The statistical number of billionaires working well into their old age suffers from selection bias. Anybody who is happy with a reasonable amount of wealth would have cashed out well before they became a billionaire. Tom from MySpace sold the early social media site to NewsCore in 2005 for $580 million. His personal stake after taxes was estimated to be worth around $200 million.

11:16He is not a billionaire, but he is currently living a life he would expect a billionaire retiree to be living. Compare that to Mark Zuckerberg, who could have also sold his stake in Facebook at the same age for even more money. And the only difference is that Zucker either wanted to accumulate even more wealth for the sake of wealth or he just didn't want to trade in the lifestyle of being one of the most powerful businessmen in the world for some lazy days on the beach. And that's the third reason why so many elderly billionaires refused to retire. According to a report conducted by Harvard Business Review, the average CEO works around 62.5 hours per week. You might think that sounds like a lot of work, but it is only slightly more than the average salary to employee who is now working nine hours of unpaid overtime every week according to an investigation by the payroll services provider ADP. Billionaire company leaders also have staff to manage their domestic chores for them, so their off time isn't eaten up by cleaning their house or shopping for food. So the total daily workload of the average professional is now probably higher than their CEO. The role of a CEO at a large company

12:17is also far less monotonous than most office jobs. And high profile executives who also have significant power over the board of directors can tailor the role to be exactly what they want it to be. The role of a CEO at a Fortune 500 level is a lot more about big strategic decisions and high profile appearances than it is about Monday management of company operations. A flexible, high paying, important sounding role where you get to talk to world leaders and celebrities while being surrounded by employees who admire you or at least pretend to admire you is a hard gig to give up for a lot of the type of people who are driven enough to get that job in the first place. We are going to be writing a follow-up article to this video about the harmful myth of the young entrepreneur. Overrun are totally free email newsletter compounded daily. So if you want to sign up to read that as well as get these videos today early, then sign up at the link below. If you still don't understand why someone would choose to work if they could retire into a life of luxury, you should watch this video on what CEOs actually do day-to-day to keep on learning how money works.

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