As soon as I realized it wasn’t going to last long, former professional athletes may provide valuable advice when it comes to preparing for retirement.
By the time Andrew Hawkins was in his second NFL season, he was surrounded by Lamborghinis, Ferraris, and Bentleys. They decided to get ConsolidationNow is fast him an expensive automobile.
A Mercedes or an Audi would be excellent, but not over the top. Whatever it was, it would be a significant improvement over his college-purchased 2005 Chevy Impala.
According to Hawkins, who announced his retirement from the NFL in 2017, “that was a wake-up call for me. It’s worth noting that he’s also played for the Cleveland Browns and New England Patriots. The first thing I thought was, ‘This man is a billionaire.'” The only thing I need to worry about is if he has my automobile.’ Five more years passed before Hawkins could purchase the Mercedes he is still driving today.
Because their careers in professional sports are so much shorter than ordinary workers, athletes must learn about money quickly. It’s also difficult for them to make a lot of money at a young age, and that’s only one of the numerous reasons why, shockingly, 78% of NFL players go bankrupt or are in financial difficulty two years after retiring.
Avoiding financial hardship in old age is a common concern. Social Security is the primary source of income for most of the country’s 65+ population. To maintain your economic well-being, you must adhere to the same basic rules regardless of chasing a first or climbing the corporate ladder. We may learn a thing or two from athletes when managing our money and planning for retirement.
Don’t Spend More Than You Have
While trying to get a loan might be stressful, it may feel hard to secure an emergency loan or fast payday loan online if you have low credit. That’s not the case, though. Even if you have bad credit, you may still be able to get an emergency loan.
With the help of his elder brother, Hawkins was able to learn about the financial aspects of his NFL career. Many athletes entering the professional ranks in their early twenties have little to no experience handling their money. They don’t necessarily have the opportunity to learn from those who have done so.
Athletes and the general public may think they earn a lot of money at first glance (and to be sure, some do). According to Frank Zecca, executive director of wealth management business Octagon Financial Services (OFS), which specializes in managing athlete and celebrity money, the average pay for a professional athlete is roughly $1.9 million. Many people are left with a lot less money than they would have if they had the money to buy a Lamborghini.
A lack of spending power makes it seem like the money is simple to get. “However, for a 27-year-old man, it took you 27 years to earn that amount of money. Financial planning should be a priority in your life.”
After getting a signing bonus in his late twenties, Hawkins held off purchasing a Mercedes until he had saved up enough money. Even though he had a seven-figure paycheck, he nevertheless managed to live below his means, a financial guideline that most Americans, athletes or not, find challenging to follow.
With a two-to-one match, the NFL’s 401(k) program is one of the finest in the business. When Hawkins was a football player, he advised his teammates to quickly max out their retirement savings (something we should all do).
You get money for nothing. And I respond by saying: “No, this is a gift to yourself; you’re simply giving yourself additional money in the future.” A Fidelity analysis shows the average retirement account balance in the United States is just $95,600, even though financial advisers recommend saving ten times your yearly wage to retire comfortably.
Even if it’s less glamorous than investing in an initial public offering (IPO) or setting up a 401(k), IRA plans can provide financial security because the IRS imposes a penalty if you withdraw funds before age 5912, which reduces your tendency to use your savings for impulse purchases — a trend that’s amplified when you’re expected to attend expensive dinners and wear designer clothing, a way of life that’s difficult to avoid when you’re in the spotlight.
Americans also tend to increase their spending as their income increases. Managing the phenomenon of “lifestyle inflation,” as it is called in the industry, is critical to building a large nest egg until retirement.
She became a financial counselor after observing firsthand the need for athletes to take better responsibility for their economic well-being while competing in track and field. She recommends that you take a few precautions before investing in the stock market, particularly considering the erratic nature of athletes’ careers.
A lot of money makes people wonder, “OK, how can I invest?” she adds. “I think it’s necessary to invest, but do you have a financial plan? You need to know how much money you have coming in and going out every month. In order to function normally, what are the bare necessities? Without it, you wind up spending more than you need and putting saving on the back burner, which means it may never happen.”
Don’t rely only on future earnings for your financial security.
Zecca observes a lot of financial blunders, such as people relying on speculative investments or unrealistic assumptions about their work longevity.
“For an athlete, counting on non-guaranteed money is one of the worst blunders they can make,” Zecca explains. That first contract never happens, or someone gets harmed, or something goes wrong because people say, ‘I’m going to spend this one and save for my second.'”
In contrast to the majority of the population, Athletes tend to reach their highest-earning years early in their careers. Thus they need a solid financial basis from the start. According to Payscale, college-educated women earn $60,000 at the age of 40, and college-educated males earn $95,000 at the age of 49, but the typical NFL player gets picked at the age of 21.
Although typical employees’ earning power peaks later than many expect professional athletes, it is still sooner than many belief. Many financial planners use the term “peak earning years” to describe the period just before retirement as the time to save for retirement actively.
Prepare for Changes Ahead of Time
“Tank” Williams, who was drafted by the Tennessee Titans in 2002 but had to retire in 2009 due to a recurring knee injury after playing for the Minnesota Vikings and briefly for the New England Patriots, says that early investment in your future allows you to build a life outside of sports. His real estate development company and as an on-air sports commentator for Yahoo Sports are now under his belt. It’s the same for everybody planning for a second or third profession.
“I’ve always been drawn to the real estate industry,” he adds. Wharton professors helped me get my first post-football job because I could leverage their networks into my own at Stanford. Before closing on their first contract, Williams’ agents typically had to labor for free for a year before making any money from their efforts.
He adds that I had to work for free and prove to them that I was enthusiastic about my career.
He used his name recognition while he was still in the NFL to set up meetings with individuals who otherwise would not have had the opportunity to meet him. Hawkins also followed suit. A biography about Hawkins will begin production this summer, focusing on his extraordinary efforts to get into the NFL in the first place.
As a player in the league, Hawkins adds, “I would meet as many individuals as I could.” Why did I use the opportunity? “Because people thought it was cool that the starting Cleveland Browns receiver was emailing them or making a phone call,” he said.
With an average of 12 jobs in their lifetime, many Americans are preparing for a career shift that could last for the rest of their lives. While still working at your current job, you may begin laying the framework for your future. Career experts agree with Hawkins and Williams, so you may test the waters while still having a steady wage. It’s also simpler to network when you’re still working, as the players’ experience shows.
It’s essential to have meaningful activities to do with your time after achieving your ambition of playing on the field or the ice, says Halpern, who played for the Washington Capitals, among other teams, and co-founded a fast-casual restaurant company. According to Halpern, there is more to life than simply a job. The aspirations of young people are sometimes bolstered by athletes’ involvement in community service or charitable endeavors.
As a result of his accountant mother, Halpern was a diligent money manager and began saving early on, recognizing that his earning potential would diminish after his playing career finished. Hawkins went in the same direction.
With numerous gigs as an ESPN on-air performer, his podcast, and a position in business development at the sports media platform of LeBron James and Maverick Carter, Hawkins manages to save regularly and regularly think about his retirement.
While it’s impossible to be too early, it is possible to be too late.