Just as the player has a strategy that is nimble and allows for immediate change on the field or in the rink, professional athletes need to plan and manage toward how their retirement finances and lifestyle will look if they need to suddenly retire at an early age. It is interesting to note that the average world-class athlete retires from their sport at the age of 33. The average NFL player is retired by the age of 28, the average world-class wrestler by 24 and the average elite gymnast by 19.[1] This early exit from the sports world means planning for a long retirement, a new career or both for most athletes.

While many of the sports leagues have retirement plans, including pensions and 401Ks, the relatively short career of an athlete could make it difficult to save enough money to continue to live the lifestyle the athlete is used to off of those plans alone. Major League Baseball started its pension plan in 1947. Players today are eligible for the minimum pension after 43 days of service time at the major league level. Players accrue full pension benefits when they achieve 10 years of service time, making them eligible at the age of 62 to receive $200,000 a year for the remainder of their life. The pension is joint-survivor; meaning surviving spouses are entitled to some of the pension benefits.

On the other end of the stick, The National Hockey League initiated a pension plan in 1947 but didn’t make it very robust until changes in the 1980s. Today players automatically join the NHL pension plan after playing one regular-season game. In 1986, the NHL switched from a defined benefit plan to a defined contribution plan. Retired NHL members who are credited with 160 games (approximately two seasons in the league) or more can receive the U.S. maximum contribution, which was $50,000 in 2012.[2]

While the press often tells stories of high-profile athletes who have made bad investments or even filed for bankruptcy, there are professional athletes who should be applauded for their ability to invest wisely and to seek out advisors early on in their career. In fact, a big part of any investor’s plan is to understand the many options that are out there and what best fits their needs, their personality and their game plan.

A private wealth manager can work to customize a strategy by digging in and thinking through what makes each client tick, what are the potential scenarios that will require a client to have a secondary income or two, how much money should be saved each year, how much should be invested, and much more. Working with an advisor can open up a world of options so that planning takes place instead of taking no action but living with a persistent financial concern and fear of the unknown future.

In my day-to-day interactions with athletes and agents I see the challenges that they face. Many athletes are feeling the pressure to “keep up with the Joneses.” They are watching one of their peers who may make more money than they do create high profile deals or investments in sports, restaurants, franchises, cars, homes and more. However, they may not be seeing the full picture of the decision process that helped to make that investment decisions, as well as the fact that they may not have the same salary as their peer to begin with.

I started the Osborne Advisor Pro offering to give agents and athletes a trusted partner that they can start working with early on in an athlete’s career. The point being that if we can get the right infrastructure in place and decision making mapped to a larger plan, then we will have a roadmap that includes risk management planning. This helps to avoid any erratic investing or pressure to get involved with deals that do not map well to the individual athlete’s larger plan and agenda for financial well being.

While we are in the business of planning and managing the client portfolio and growing the assets, we’re also focused on protecting the assets and helping our clients evaluate when and if they have the funds to invest in external businesses or second stage career opportunities for when the playing field is no longer an option. We even help our client think through what negative or positive impact is made by each and every investment from the portfolio, to a second house or car!

Every pro athlete needs to map out their own financial income plan with early retirement statistics in mind so that a timeline for a secondary income and career can be established and discussed with a trusted financial advisor. To truly manage your risk and your ability to maintain the lifestyle you desire with retirement variables factored in - all big picture investment ideas need to be woven into the larger financial plan and risk management strategy. Risk is very much a factor on the field and off and should be evaluated by a un-biased advisor whose goal is to keep you on a steady path for financial security.

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David Osborne is the founder of Osborne Advisors, an independent private wealth management firm offering wealth management to high net worth individuals, families, estates and corporations since 1999. An extension of Osborne Advisors, Osborne Advisors Pro, is a sports wealth management offering created solely to focus on the unique financial management needs of professional athletes and coaches.

This article was written and prepared by Red Fan Communications (Austin, TX, 512.551.9253) and David Osborne. David Osborne is a registered representative and registered investment adviser representative of SWS Financial Services, Inc., a member of FINRA and SIPC and a registered broker dealer and registered investment adviser who does not provide tax or legal advice, located at 1201 Elm Street, Suite 3500, Dallas, TX 75270, 214.859.1800. Though information provided in this article was prepared by sources believed reliable, SWS Financial Services, Inc. does not guarantee its accuracy or its completeness. This article may not be duplicated or redistributed without the prior consent of SWS Financial Services, Inc. Red Fan Communications is unaffiliated with SWS Financial Services, Inc.