Tuesday, January 10, 2012

Retirement Saving in a Freelance World

When Newbies waltz into my office, I always present to them the 21st century realities of the animation business, one reality being:

"Don't anticipate spending you career at one studio. If you're one place for five years, that's exceptional. You'll be working at lots of differents companies, both freelance and on staff. One or two decades from now, you'll be working at places that haven't been started yet ..."

That being the case, it's more important than ever that you sock loot away for your eventual geezerhood. Happily, TAG member Jennifer H. Jerrard has put up a fine post detailing some of the things people in the biz (both animation and visual effects) should be doing now. ...

... Those who don’t plan to work until they drop will need some means of paying for food and housing in their old age. Social Security alone might not be enough.

The Los Angeles visual effects industry does not offer a safety net for its retirees. Visual effects might earn big money at the box office, but VFX artists and VFX studios do not share in those profits. VFX artists do not earn ongoing income from a project after the project ends. When they retire, they’ll be on their own.

The older VFX artists I know already have some kind of plan for their future. Some left the VFX industry for better compensation at 839 studios, and some left VFX altogether. The rest save their money, pay down their debt, work towards home ownership, start their own businesses, create their own intellectual property, invest or practice some combination of the above. ...

For artists who spend their careers under the feathery wings of The Animation Guild, there is a bit more security. Things like:

* A monthly pension check from the MPIPHP to go with the Social Security check.

* Retiree medical benefits under the MPIPHP.

* A lump sum payment from the Individual Account Plan of the MPIPHP that can be rolled over into a tax-sheltered retirement account.

* A 401(k) Retirement Account from TAG.

My two cents: The best move you can make when you get into this business is to live below your means, pay yourself first, and assume that you will have to retire on your own stash even if that is not, three decades down the Great Highway of Life, the actual case.

When I was thirty-nine years old, I didn't have a pot in which to dump change from collecting empty Coke bottles. Then I got a series of jobs that actually paid something, and I made up my mind to put as much money away as possible, because I didn't want to be in a position where I was out of work and had no savings.

Again. Strange, huh?

Very slowly, I learned where to put extra money, and where not. I'm not a licensed financial advisor, but I believe that simplicity and low costs are the best strategies for most people, which has led me to put my money in:

Vanguard Total Stock Market Index

Vanguard Total Bond Market

Vanguard Total International Stock Index

Vanguard Treasury Inflation Protected Securities

I don't use an "Investment Advisor" since he or she usually skims 1% or 2% (plus commissions) off the top. I believe that every dollar you pay an Investment Person is a dollar you take out of your own pocket.

I further believe if your age is 25 to 45 then your stock/bond allocation should be 60%/40% ...

That if your age is 45 to 60 your stock/bond allocation should be 50%/50% ...

And if you are over the age of 60 your allocation should be 40% stock/60% bonds (maybe even 35%/65%.)

Whenever I've gotten tricky and invested in more exotic items, like sow belly futures or individual stocks, I have gotten burned. The small secret about smart investing is that it's simple ... if you allow it to be. The sad part is that many people start making it complicated by going a twisty route chasing hot tips and (ultimately) losing their shirts.

So keep it simple and straightforward. And know that time is on your side. It's close to impossible to outthink or outguess the markets. So don't waste time and energy trying.


Anonymous said...

good post.

Steve Hulett said...


Anonymous said...

Great Post, every freelancer should read this and heed what's said.

Steve Hulett said...

I have had people in their sixties come into my office and say:

"I pulled my money out of the pension plan ... I worked at a lot of non-union studios and didn't save anything.

"The work has slowed way down and all I've got is Social Security. Can you help me?"

My answer (which makes me nauseous when I say it) is: "Sorry, but there's not much I can do."

And I know people who spent every nickel of a large salary (thinking it would go on FOREVER), are now unemployed, and now have to downsize like mad. I know people who have lost their houses.

On the bright side, I know animation artists who made a lot of money in the nineties, tucked cash away, and are now happily retired. At 52.

Life is unpredictable. You can plan for many things, but some of the curve balls will STILL hit you in the head. So don't spend every paycheck. SAVE.

Anonymous said...

Good stuff. Thank you for this post, Steve.

Life is unpredictable. You can plan for many things, but some of the curve balls will STILL hit you in the head. So don't spend every paycheck. SAVE.

So true.

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