Learn About Retirement Planning from Pro Athletes

We all do it: Watch pro sports and wonder what it would be like to make that kind of money, do something you love, and then retire with a cushy lifestyle.

Turns out, retiring from a career as a professional athlete may not be as wonderful as we think it is. There are many pitfalls and there’s lots we can learn about retirement planning from pro athletes.

Retirement Plans for Pro Athletes and What You Can Learn From Them

First Steps

According to Andre Mirkine, president of the Sports Financial Advisors Association, “They’re (the athletes) not going to be able to put away in qualified retirement plans enough money to live on.”

Sound familiar? You’re not alone. Many – perhaps most – of us are in a similar position. We just don’t have adequate funds or time to fully fund our retirement. By the way, “qualified plans” refers to retirement options with tax advantages.

Step one. Figure out where to put the money you are able to save so it will do you the most good. There are lots of options which we’ll discuss in more detail in future posts.

Step two. Remember: if it sounds too good to be true, it probably is.

“Sometimes, former athletes run out of retirement savings chasing after wild investment deals,” says Pete D’Arruda, a financial planner who frequently advises athletes.  Enough said?

Step three. What do professional athletes’ options include that you should look for as you plan for your retirement?

  • Pension Plans. If you can find a company that still offers pension plans, you’re lucky. Incredibly lucky. Most have switched over to 401(k) plans, which benefit the company, but can really stick it to the employees. Major League Baseball pensions “are reputed to be among the most generous in sports.” Players receive full pension benefits after 10 years of service time and can be eligible for $200,000 a year for life at age 62. If you’re young enough and you have the skills, the MLB is the way to go.
  • Health Care Coverage. It’s tough to find health care coverage that carries over into retirement, but this can be a huge financial benefit as you age. For example, MLB members with at least four years of service can continue their health care coverage and pay only 60% of the cost of their chosen plan.
  • 401(k) Plans. This is the most common retirement plan currently being offered. The NFL offers players a 401(k)-type plan called the NFL Player Second Career Savings Plan. It provides an employer match of up to $2 for every $1 contributed by the player. Employer matches are the “goose that lays the golden egg” of 401(k) plans, both your contribution and your employer’s – and the profits from the investments – are tax deferred, the more your employer contributes the better off you are. But it’s not all roses, click here to learn how you may be getting burned by your company and the government.
  • Union Leverage. Players’ strikes. Management lockouts. As a fan, unions can be a pain in the neck. As an employee, however, many of the benefits we enjoy today are the result of union bargaining. In 1885, a group of nine players formed the Brotherhood of Professional Base Ball Players – and you know what they can do today, if they choose to. So, if there’s a union where you work, joining could be a good idea.

There are no shortcuts to retirement security, not even for professional athletes. But there are options that can ensure you get on – and stay on – the right path for a secure retirement and much we can learn about retirement planning from pro athletes.

Click here to read the article Go long: Retirement plans for pro athletes by Sonya Stinson | Bankrate.com

 

Leave a Reply

Recent Comments