Investments to Consider as an Athlete
Professional athletes tend to have shorter careers than most other professions. This is because their bodies have to be able to perform properly. With that being said, in most professional sports, the average retirement age of athletes is 33.1 This is far too early to start receiving retirement benefits offered by sports leagues. So, for a more financially secure retirement, professional athletes must make smart investments. In this article, we are going to outline a few smart investments that athletes should make during their careers designed so they can be financially stable after they retire.
1. Start or Invest in a Business
A great way to ensure you have an income after you retire is to either start or invest in a business. Many people open car dealerships or restaurants with the money they made as a professional athlete. A great example of this is John Elway, who opened several car dealerships, which he later sold to AutoNation for 82.5 million dollars.2 Another example is Tim Horton, who opened the popular Tim Horton’s donut and coffee chain.
If you do not have the passion to open a business of your own, you can always invest in another company like Shaquille O’Neal. He invested in many stocks and owned partial stakes in several large businesses. Because of these investments, he has one of the highest net-worths among retired athletes. With that being said, starting or investing in a successful business is a consideration to provide finances after retirement.
2. High-Interest Savings Account
As mentioned above, many athletes retire before they are eligible to withdraw from their 401(k) retirement plan. Depending on the league, athletes can start earning a pension, only after completing the mandatory career length, from the ages 45 to 62.3 Considering many athletes retire far earlier than this, investing in a high-interest savings account can be helpful. Unlike a retirement account, you are in control of your savings account and can withdraw from it at any time. Your funds will collect interest throughout your career, growing your wealth. This could be a consideration when you will be waiting to collect your pension or withdraw from your 401(k).
3. Real Estate
Real estate can be one of the best investments an athlete can make. This is because real estate generally increases in value over time, unless there is a housing market crash. Investing in rental properties or a large apartment complex can generate a steady income. As your renters pay their monthly rent, you may be able to receive a profit each month. To make this investment low-maintenance, you can hire a property manager to handle the work for you. This way, you can just collect the money from your investment and let them handle the rest. However there are many considerations in real estate investments, so ensure you’ve done your homework before investing. Investments in real estate involve risks such as refinancing, economic impacts, property value changes, operating expenses and management skill dependency.
Many athletes prefer using financial advisors to help them make smart investments. A financial advisor is someone who is on your side and wants to see you do well in the future. If you are wanting to work with someone to get investment advice based on your personal situation, please contact us. Our team of financial professionals is highly experienced in helping athletes prepare for their futures after their careers.
Equitable Advisors, its affiliates and financial professionals do not offer legal, tax, business start-up, real estate or related advise or services. You should consult with qualified and appropriately licensed legal, tax, and real estate professionals regarding your needs, questions and particular circumstances.
1 “Professional Athletes Prepare for Life After Sports” Tala Hadavi VOA News, Mar 20, 2011
2 “7 Athletes Who’ve Made Most of Their Money Outside of Sports” Jeremy Bowman The Motley Fool, Nov 29, 2017
3 “Retirement benefits of professional athletes” Sonya Stinson Bankrate, Sep 25, 2012