Athlete Retirement: Planning Financially And Psychologically

Many athletes play and live like the roar of the crowd is eternal. But moments of fame don't last forever especially if you are in sports that are totally dominated by youth and physical performance rather than skill and experience. Fame always fades, sooner or later and it's always better to be prepared both mentally and financially. Whether you decide to retire because of age or injury or it is your personal choice, the end of a sports career can be very chaotic if you don't have enough funds to maintain the lifestyle you used to. Expensive restaurants and fancy cars can no longer be a part of your life when you are in debt and don't have a steady income from side businesses.

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While many athletes still tend to invest into launching their own businesses, they limit themselves to do something that is based on their fame like launching a sportswear brand or their personal brand of perfume. Sometimes it works out but in many cases such brands lose traction when an athlete behind them starts losing popularity.

So what do you do when things like training, competition and camaraderie suddenly disappear and your future is now defined by a thing called financial literacy.

The very first thing that you should understand is that retirement is not a finish line and there's a lot waiting for you ahead. Think of it as a transformation. And while many athletes enter it unprepared, you should take your steps way before retirement becomes a reality. At the end of a career athletes may face financial instability after years of short contracts and uneven earnings. That's usually a trigger that makes people start saving and investing.

Facing the Retirement Challenge

There are two sides of retirement: financial and psychological. Athletes with savings but no purpose will struggle to find a sense in life after the end of their career as athletes full of plans but with no financial background to maintain the same lifestyle. Having a passion but without stability always leads to burning out. The key thing here is to be proactive and avoid the situation when you are sitting and waiting for the career to end without any plans both financially and professionally.

Mastered the Field? Now Master Finance!

Despite that popular perception that you can find here and there in the news and glossy magazines, most professional athletes do not retire wealthy. Many professionals earn well for just a couple of years of their career but fail to maintain the same income afterward. According to Fortune, up to 16% of retired NFL players face serious financial challenges within five years of leaving competition and there are lots of reasons for that starting from short career spans and irregular contracts and ending with poor financial literacy and pressure to maintain lifestyles. Unstable post-retirement income backed with lack of financial education in athletic training programs is one of the main reasons that push athletes closer to bankruptcy.

If you want to avoid being in their shoes, here's what you need to do.

Save During the Peak Years

Always think of your peak earning years as temporary and create a structured budget to ensure your money works for your future, not just for your today's lifestyle. Cut your income flow into separate accounts made for disposable income and long-term investments. Avoid upgrading your lifestyle with every new contract. Remember that buying a new car each time you receive a sponsorship contract may sound attractive but will definitely put you in financial trouble. Do create an emergency fund that will keep you afloat for 6 to 12 months and never put all the money in one asset, bank or project. If you earn big for five years, plan your finances as if that's your only and final income for life.

Find a Financial Planner

Even the most disciplined athletes need expert help. Having a trusted advisor who will navigate you through the world of taxes and investment opportunities is so important during your peak years. Do remember to only choose professionals, not just people you know who are 'good in finance' and sign transparent contracts with performance-based fees. The golden rule here is to stay involved and never disengage because if you are not on top of everything then there's room for many unpredictable things.

Think of Post-Retirement Income Streams

When the career comes to an end, you should have additional income sources to stay afloat financially. One of the easiest paths is to enter coaching or mentoring and share your experience through academies or private training. This can be very fruitful especially if you could find a project in the Middle East. Various business ventures like sports nutrition or fitness clothing is a really good idea especially if it's something you always thought is nice to do. But do remember that you shouldn't invest a significant portion of your wealth into just one venture because if it fails, your finances are at great risk.

How to Prepare Psychologically

Sport provides a sense of belonging, purpose, and rhythm. Retirement often feels like losing everything right away and it often comes with anxiety and emptiness as a package deal. If you want to avoid that, then you should be prepared and preparation takes time.

Just like you were training physically for better performance, you should train mentally for an easier transition. Planning your retirement should begin at least two years before your career starts to slow down. Take part in workshops or counseling offered by leagues to start this transition from an active athlete to coach and mentor. Think of post-retirement life as a new chapter and visualize what you want to do during this period. Is it coaching or running a small restaurant in Italy or both? Discuss your future goals with family and your older colleagues as they may give you a couple more ideas that you haven't been thinking of. And do start small side projects in order to test your interests and define what interests you the most.

by a Handwiki contributor