Pro Athletes’ Secret Playbook for Retirement Savings

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Professional athletes, despite the glitz and glamour of their careers, share a common financial trajectory with the average American. They have the same opportunities to earn, build wealth, and importantly, save for retirement. Early financial decisions can have significant impacts later in life, particularly when athletes encounter unforeseen circumstances or income fluctuations. The financial strategies employed by these professionals can provide valuable insights for those aiming to secure their future and retirement.

The first paycheck and contract mark the initiation into financial independence for professional athletes. According to Michael Olivia, a financial planner and senior partner at WestPac Wealth Partners, athletes should treat their careers like a business, understanding their financial statements, including balance sheets, income statements, and equity. Keeping a close eye on income, spending, debt, taxes, and savings can guide significant decisions such as buying homes or cars, and everyday expenses like groceries or clothing. Monitoring where every dollar goes can make budgeting more straightforward and help curb impulse spending and lavish lifestyle choices.

The Financial Playbook: What We Can Learn From Professional Athletes

Professional athletes, despite their seemingly different career paths, have similar financial needs to the average American. Just like the rest of us, they earn, build wealth, and save for retirement. Their decisions early on in their careers can have profound impacts, particularly if they face unexpected events or income dips. Their financial strategies offer vital lessons for our retirement planning.

Mastering the Financial Basics Early

From the moment they receive their first paycheck, professional athletes need to manage their finances like a business. Financial planner and senior partner of WestPac Wealth Partners in San Diego, Michael Olivia, recommends understanding financial statements like balance sheets, income statements, and equity. Athletes, like anyone else, should monitor their income and expenses, knowing how much money is coming in, how much they are spending, and how much goes towards debt, taxes, and savings. This awareness facilitates better decisions, from large purchases like homes and cars to smaller expenses like groceries and clothing.

Aligning Interests and Goals

Reginald W. Wilkes, senior vice president of wealth management and senior financial advisor at The Wilkes Sports Group at Janney Montgomery Scott LLC, emphasizes the importance of athletes considering their priorities beyond their sports careers. He shares his personal experience from his 10-year NFL career, realizing early that football would not provide him with the financial or intellectual gratification he needed for his lifestyle and family. His planning involved both education and finances, considering his family’s needs, like his wife’s medical school tuition.

Crafting a Financial Plan

Income for professional athletes can be unpredictable, making financial planning crucial. Wilkes recommends thinking about the three phases of an athlete’s financial career: cash accumulation, transition, and retirement. He advises his team to view their first contract as potentially their last, fostering a long-term financial perspective. Discussions with family and professional advisors can help build a sustainable strategy.

Preparing for Career Changes

Athletes often seek new career opportunities in their 30s or 40s. Marshal Davis, a former professional baseball player and current president of Ascendly Marketing, helps athletes create second-career strategies. He shares how one of his clients invested in culinary courses during his playing days and now owns a successful restaurant. For those feeling drained by their current job or interested in a new career path, exploring options through classes or side hustles could offer a rewarding change.

Preparing for Life-Changing Events

Athletes, like any individuals, need to prepare for unexpected events. Olivia points out the commonality of career-ending injuries in professional sports, emphasizing the importance of disability insurance as a safeguard. Life insurance can also be beneficial, offering access to cash value during an individual’s life if needed. Personal risk management is essential in any robust retirement plan, whether that’s building an emergency fund or maximizing employer-provided retirement account contributions.

Key Takeaways

The financial lessons we can draw from professional athletes are applicable across the board. Understanding financial basics and aligning personal and financial goals provide a solid foundation. Crafting a detailed financial plan, preparing for career changes, and getting ready for life-changing events are key strategies for financial stability and successful retirement. As in sports, the key is to prepare, adjust, and aim for the long run in financial planning.

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