The impossible dream of banker retirement

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In banking parlance, it's called 'the number': the amount you need to jack it all in and do something else with your life which is more rewarding and less physically and emotionally coruscating. 

The size of the number is moot, however. "People used to talk about the number a lot," says Eli Lederman, an ex-managing director at Morgan Stanley-turned novelist and entrepreneur. "But it's going to be so different for everyone. It all depends on whether you've been divorced, whether you own your own house, whether you're having your children privately educated. Everyone has a different number and lifestyles change over a period of time - just because you don't have children now, that doesn't mean you won't have any in future."

A recent report by HSBC found that 38% of people found their retirement provisions were inadequate once they actually stopped working. We spoke to one trader who left the industry in 1997 with $1.2m in the bank. Eight years later, he'd lost it all on a failed business venture. "If you're a trader in a bank, you actually lead a very sheltered life," he told us. "When you go out into the real commercial world, there are a lot of very untrustworthy people out there. In my experience, traders often get their comeuppance."

Another retired banker, a former senior structured product professional from a European bank, said he and his colleagues used to look at mortality tables and try predicting how much more they needed before they could leave. He got out (with an undisclosed sum), but he said it's become a tougher call to make.  "If you've got $50m, it's obviously not going to be a concern. But if you've only got $2m and you want to live off that for 20 years, then you need to think very carefully about inflation surprises and unexpected expenses."

Government wealth taxes are also a concern for bankers trying to amass lump sums. Wealth taxes in the US are currently minimal, but have been touted as a future fiscal battleground. In the UK, a so-called 'mansion tax' is on the cards. In Greece, a property tax has been levied through utility bills.  "Governments are looking for tax revenues - taxation has become a big source of uncertainty if you're living in the UK or other Western countries and are saving for retirement," said the former structured products banker. "You just don't know how big your pot needs to be."

As a result, it seems more and more people are stuck in banking, trying to amass enough money to escape and then deciding they need more and more. "I've seen people leave banking with a lot of money and yet still feel very stressed that they don't have enough," says Lederman. "The trouble is that a lifestyle of extravagance can be habit forming. It's very important to get the right number for you."

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