A Majority Of Athletes Go Bankrupt Shortly After Retirement
Many people think that professional athletes are set for life once they retire, but statistics show it’s a very different story. While the average American works well into their later years before they can leave the job market, athletes often leave their professions decades earlier, which can strain their finances. This is why it’s important to plan carefully, since you may not be able to utilize a payday loan advance i.e. usaloansnearme.com to cover an unexpected bill during your retirement. An estimated 78 percent of players who retire from the National Football League (NFL) face financial hardship within two years of retirement, according to a report from USA Today. Meanwhile, this rate is closer to 60 percent for players who retire from the National Basketball Association (NBA).
But howdo millionaire athletes burn through their money so quickly? Experts say overspending is a major factor. This is especially prominent since unlike the average employee who earns more over time, a pro athlete often gets most of their money upfront. A sudden influx of money causes many of these athletes to make ill-advised investments and adopt expensive habits. These range from rare cars to jewelry collections. At one point, an unpaid bill from a jewelry store resulted in an $860,000 tab for former Philadelphia 76ers star Allen Iverson after interest, court costs and other legal fees.
In an effort to cut the rate of athletes going bankrupt after retirement, the NFL even holds extensive workshops for rookies covering personal finance as well as other topics. So far, it is unclear how effective this initiative has been.
Though the majority of athletes from the NFL and NBA face financial hardships during retirement, it doesn’t necessarily mean you will too – so long as you take the right precautions.
According to the Department of Labor, the average American spends 20 years in retirement, so it’s important to establish a savings plan. Even if you’re already putting money away every month, don’t let up.
However, if you’ve been slow off of the savings starting block, get started as soon as possible. Start by putting a little bit of money away every month into a specific retirement savings fund or a separate savings account. As you get more comfortable with this habit, slowly increase how much you save from every paycheck.
Figure Out Your Needs
To maintain the same standard of living, the average retired household will need to spend roughly 70 percent of their pre-retirement income, the agency says. Meanwhile, lower-earners may need as much as 90 percent.
If it seems like you may come up short of these marks, consider moving into a smaller home that’s more affordable to maintain. In addition, think about moving to a NC state with more affordable taxes, learn more here.
Don’t Prematurely Spend Your Retirement Funds
If your retirement savings are maturing well enough that you feel you can take a little money out to buy something or make an investment, don’t. By doing so, you will lose the interest you might have earned on that principal.