How Long Will the Money Last?

Most pro athletes will earn their biggest paychecks between about 22 and 30, then live another 50 years. That is the whole problem in one sentence. A plumber or a teacher spreads their earnings across 40 years. An athlete has to make a few years of pay last a lifetime. The good news: the math is simple, and once you see it, the decisions get easier.

How long careers really are

• NFL: The most quoted average is about 3.3 years, a figure usually attributed to the NFL Players Association. It includes everyone who signs, including players who never make a regular-season roster. The NFL has countered that players who make an opening-day roster as rookies average about 6 years, and first-round picks close to 9. Both can be true, because they measure different groups.
• MLB: A University of Colorado study of position players who started between 1902 and 1993 found an average career of about 5.6 years, with one in five playing only a single season.
• NBA and NHL: Averages of roughly 4.5 to 5 years are widely repeated, but we could not find a strong, current published source behind them. Treat them as rough.
• Whatever the average, your own career can end with one play. Plan as if it will be short and celebrate if it is long.

The math: will it last?

Here is the whole calculation. Take-home over your career, minus what you spend while playing, equals what you have at retirement. Then see how long that pile lasts at the lifestyle you plan to keep.

Notice what did not matter much in that example: investment returns. The two numbers that decide the outcome are how much you spend while playing and how much you spend after. Players often focus on finding a great investment, when the bigger win is a lifestyle that the savings can actually carry. This matches the NBER research on NFL bankruptcies, which found that longer and better-paid careers gave players surprisingly little protection.

The 4% rule, simply

In 1994, financial planner William Bengen studied U.S. market history and found that a retiree who withdrew 4% of their savings in the first year, then raised that amount with inflation each year, would have made the money last at least 30 years in every period he tested, using a mix of stocks and bonds. The flip side is the useful part: to know how much you need, multiply the yearly spending you want by 25.

• Want $100,000 a year? You need about $2.5 million.
• Want $200,000 a year? You need about $5 million.
• Retiring at 30 means the money may need to last 50+ years, not 30. Many planners suggest a lower rate, closer to 3% to 3.5%, for very early retirees.
• It is a planning guide, not a promise. Bad markets early in retirement hurt the most, so stay flexible.

League pensions: when you vest

• NFL: You are vested in the pension with 3 credited seasons. A credited season generally means being on the active, inactive, injured reserve, or PUP list for at least 3 regular or postseason games.
• NBA: Players are generally vested after 3 years of service, with the maximum benefit reached at 10 years.
• MLB: Players vest after just 43 days of major league service, and each additional 43 days builds more benefit, up to the full pension at 10 years.
• NHL, WNBA, MLS: Plans and vesting rules differ. Ask your players association's benefits office for your exact status every year.
• A pension is a floor, not a plan. It usually starts years after you stop playing, and taking it early reduces the payment.

Five ways to make it last longer

1. 1
   Save the non-guaranteed money

   Bonuses and incentives should never become lifestyle.

2. 2
   Lock in fixed costs low

   A paid-off, modest home and one or two cars keep your yearly number small.

3. 3
   Use every league plan and match

   Retirement accounts grow tax-deferred and are harder to raid on impulse.

4. 4
   Start the second career early

   Even $75,000 a year of earned income after football cuts what your savings must cover by a lot.

5. 5
   Keep fees low

   A 1% fee on $3 million is $30,000 a year that is not paying for your life.