Can Jimmy Cayne Afford Retirement?

This morning's NY Times noted that Bear Stearns Chairman Jimmy Cayne has sold all of his holdings for a paltry $61 million, down about a billion from what it was worth at the $171 peak last year.  Like most of you, that made me wonder if Jimmy would make it through this difficult period. Sure, $61 million is a lot of money for you and me, but Jimmy's lived a different lifestyle.

So, I thought that it would be helpful to sketch out a retirement budget for him.

The good news is that Jimmy Cayne held his shares for a long time.  So, he should be paying taxes at the preferable 15% rate rather than 28% short-term rate.

The Times article notes that Jimmy has just purchased an apartment in the newly refurbished Plaza for a cool $26 million. He plans to sell his current Park Avenue apartment. Cayne may be aware that this isn't the best time to be putting real estate on the market, but let's say he'll get $10 million for the Park Ave flat, leaving him $16 million in the hole on the new one.

Stock proceeds from BST sale    $61 million
Capital gains taxes (est.)            (9.15 million)
Purchase of apt in the Plaza    ($26 million)
Sale of Park Ave apt (est)       $10 million

        Net                                         $35.85 million

Let's assume that the 74-year-old Cayne plans to live another 26 years to the ripe old age of 100. And, based upon the mess he's inflicted on the economy, let's assume that he's afraid to invest his remaining assets.  How might this impact his monthly living expenses?

Well, thanks to NY Magazine, we already know that Jimmy has some pretty interesting and expensive habits hobbies.

To start, he'll need a place to play golf in the New York area.  And, assuming he's a typical NY high flyer, he'll need one place here and another in the Hamptons.

Liberty National Golf Club, about a 3-wood from the New York Stock Exchange costs $500k to join plus $20k per month in dues.  When he's out east, Sebonack Golf Club in Southampton might be a good fit. Sabonack has a $650k entry fee and I'm guessing another $25k in annual dues.

So, the golf club entry fees shave another $1.15 million off his total, leaving him $34.7 million under the mattress.  $34.7 million over 26 years comes out to about $110k per month. 

Based upon Jimmy's interests, that $110k monthly allowance could go quickly.
Let's assume about a quarter kilo per month, running him about $7.5k. And, high stakes Bridge matches, three times per week, could eat up another $80k per month if he's on a losing streak.  The annual golf club dues come to about $3,750 per month, leaving him less than $20k per month to live on.

Net                        $35.85 million
Liberty Golf Club   ($650k)
Sebonack              ($500k)   

Remainder                $34.7 million

Monthly allowance:    $110k
Quarter key                 ($7.5k)
Bridge                            ($80k)
Golf club dues            ($3.75k)

What's left:                $18.75k

So, for those of you whining about the fact that your home value has tanked, you can't pay your mortgage and you're close to homeless, stop being so selfish and think about poor ole Jimmy Cayne.

Comments

[JP Morgan]

Don't forget that he has to pay monthly maintenance fees for his apartment. Rupert Murdoch's apartment on 5th Avenue him costs more than $21,000 in monthly fees.