On this episode of Adam Talks, tax attorney and IRA Financial’s founder, Adam Bergman, Esq., discusses the impact that sports betting is having on retirement savings, and why it’s better to save for your future instead of gambling it away.
Sports Betting & Your Retirement
The podcast episode “Sports Betting and Your Retirement” by Adam Bergman, a tax attorney and founder of IRA Financial, delves into the rising popularity of sports betting and its potential impact on retirement savings. Bergman highlights the ease of access to sports betting through mobile apps like DraftKings and FanDuel, which has led to an increase in the number of people, especially the younger generation, engaging in this activity. The Supreme Court’s 2018 decision to legalize gambling nationwide has significantly contributed to this surge.
Bergman presents alarming statistics to underscore the growing trend of sports betting. For instance, Americans bet $120 billion on sports in 2023, a 28% increase from the previous year. He cites a report from the American Gaming Association, which reveals that the gambling industry saw record revenues of $66.65 billion in 2023, with a substantial portion coming from sports betting. This trend is expected to continue as more states legalize gambling to tap into the revenue stream.
However, Bergman expresses concern that the money spent on sports betting is detracting from investments in retirement accounts. He references a working paper titled “Gambling Away Stability: Sports Betting Impact on Vulnerable Households,” which claims that for every dollar spent on gambling, there is a $2 drop in net investments in stocks and other financial instruments. This shift in spending habits is troubling, especially for those who should be focusing on long-term financial stability.
To illustrate the potential long-term benefits of saving, Bergman provides examples of how small, consistent contributions to retirement accounts can grow significantly over time due to compounding returns. He uses basic mathematical calculations to show that even modest amounts saved regularly can result in substantial sums by retirement age. For instance, starting to save $1,000 annually at age 23 could yield over $573,000 by age 73, assuming an 8% return rate.
Bergman emphasizes that while gambling can be fun, it is crucial to balance it with prudent financial planning. He acknowledges that some people can afford to gamble, but he advises those who are concerned about their financial future to consider redirecting some of their gambling money into retirement accounts like IRAs or 401(k)s. He stresses the importance of starting early, being consistent, and trusting the process to achieve financial security.
In conclusion, Bergman urges listeners to be mindful of their spending habits, especially when it comes to gambling. He encourages young people to think about their future and consider investing in retirement accounts instead of risking their money on sports betting. By doing so, they can take advantage of the compounding returns and ensure a more secure financial future.
