Retirement planning isn’t a priority when you’re in your early 20’s. For many professional athletes, the initial thrill of a multimillion-dollar deal can quickly turn to financial ruin, especially if they’re inexperienced in money management. This is because many athletes start receiving huge salaries at a young age, such as 18. Unfortunately, it’s impossible to find someone with a good set of financial skills at this age.
Therefore, many athletes end up making several wrong financial decisions during their youth, causing them to lose a fortune. Additionally, while sports contracts are highly lucrative, many athletes have brief careers.
This heightens the need for proper retirement planning to guide an athlete from their contract-signing to their retirement.
So, what is retirement planning?
This is the process of determining your retirement income goals and the steps you need to take to achieve them. It consists of implementing a savings plan, identifying your sources of income, and estimating your expenses.
Retirement for professional athletes is different than most careers as an athlete may only be in their 30s when they retire. Hence, discussing with your financial advisor about life after basketball is essential in creating investments that cover your retirement expenses.
For example, many athletes launch second careers in fashion, restaurants, and real estate to generate passive income. However, not all investments are good investments. Your business venture can fail, especially if it is high-risk, leaving you broke and with no retirement plan.
Before investing in a business, do your due diligence and set up a manageable budget. A financial advisor can help you check out the ins and outs of your new business venture and advise you accordingly.
Planning for the future
Since most athletes retire young, a well-thought-of plan while you’re still playing is your best bet at avoiding huge financial losses. Remember, injuries, short careers, and lavish lifestyles put your earnings at high risk. If you go around splurging money on expensive jewelry or cars, you may have to file for bankruptcy sooner rather than later.
Experts recommend speaking to a financial advisor about your retirement plan to identify a savings plan for your income. The earlier you start saving and investing your earnings, the better, as your income can grow and provide returns over time.
Contact THE LAB 24/7 today for more information about retirement planning and life insurance.