Whilst many of us may imagine that highly paid professional athletes have little need to worry about their future incomes, a study into the finances of professional sports people in the US has suggested otherwise.
Despite being extremely high earners, the Sports Illustrated research uncovered a number of shocking facts about the state of star’s finances, particularly in their retirement.
According to the study, some 78% of professional American Football players in the US’ National Football League (NFL) will file for bankruptcy or face financial hardships only two years after playing their last game. Meanwhile, 60% of professional Basketball players, playing in the National Basketball Association (NBA) league can expect to be broke five years into their retirement.
The report highlights a shocking lack of financial planning amongst high income professionals who, with careful wealth management, should have comfortably enough money to see them through a prosperous retirement.
The financial planning concerns in professional sports are of course relatively complex. The high income of many of those involved can trigger huge tax considerations, whilst relatively short careers of around ten years or fewer, in some cases, can limit athlete’s peak earning potential.
Even with these extra concerns though, there is no reason why, with good financial advice, athletes should not be able to plan for their futures during a relatively short period, as Darren Prince, a sports agent quoted in the findings, points out;
‘Athletes typically have six to eight years that are considered the peak of their career to make earnings that will be more than they will be able to earn for the rest of their lifetime; they can earn millions during a couple years if managed properly and they learn to live off interest and not touch the principle’.
The lessons provided by those who make millions of dollars a year may seem a far reach for many of us but, in reality, they provide a microcosm snapshot of the possible outcomes of failing to plan for our financial futures, whilst we enjoy ourselves during our peak income years.
Pensions and investments, made during times when we are in good health and earning a salary, will stand us all in great stead for the future, when we enter the ‘longest holiday of our life’, retirement, and must live on whatever we have put away during the good times.