Sports Illustrated reported last year that the toughest challenge of their careers for many pro athletes is retirement planning:
- By the time they have been retired for two years, 78 percent of former NFL players have gone bankrupt or are under financial stress because of joblessness or divorce.
- Within five years of retirement, an estimated 60 percent of former NBA players are broke.
Sex, drugs, booze, expensive cars, fancy houses and ex-wives are their downfall. But, there are other factors as well. The average career is only 3.5 years -- a lot of guys never get a second contract. While the NFL average salary in 2009 was $1.9 million, the rookie minimum was $325,000. Any new player trying to keep up with the big dogs will overspend.
Former Green Bay Packers' Ken Ruettgers, who since his retirement has earned an MBA and a Ph.D. in sociology, runs a counseling service for retired athletes. He offers retiring pros this advice that is as useful for the rest of us as it is for athletes:
Five Retirement Reality Checks
- Take time. Slow down and gain a new perspective -- retirement planning can take as long as 3-5 years. Big spending habits die hard, but most retired players need to eventually make some adjustments.
- Protect your principal. You've worked hard to acquire your money. Spend what you earn from your investments carefully.
- Don't compare. There are always people that have more than you and those that have less than you.
- Get help. Meet regularly with your financial adviser and get the proper understanding and perspective of where you really are in terms of your financial situation and the rest of your life. Take time to learn about finances and investing. It will pay off.
- Consider downsizing. Talk to your spouse and get used to the idea of adjusting your standard of living. Don't feel embarrassed about having to sell your house and/or cars and downsize to a more reasonable lifestyle. Working on a budget can help you understand the level of need you have to downsize and how you might be able to do it.