What Can Sports Teach Us About Retirement?

From the ancient gladiator times to the start of the MLB playoffs, sports have always been a central part of society – bringing the world together, like during the Olympics or World Cup. Positions on a team are earned, and success is not guaranteed, no matter what Vegas tries to tell you.

But apart from celebrating the glory of a win or rationalizing a tough loss, sports can also be a microcosm for society. There are parallels between the world of sports and, well, the world. Take development, for example. Just like many athletes need to practice with better athletes to develop their skills – Serena Williams once said, “there’s no Serena without Venus” – while in business, there’s the old saying, “if you’re the smartest person in the room, you’re in the wrong room.”

Sports and retirement also have parallels. From the importance of a financial plan, ignoring what some think about age, or deciding to retire on your own schedule, we can learn a lot about retirement through the lens of sports and professional athletes.

So, let’s take a closer look at what sports can teach us about retirement.

Create a Detailed Financial Plan

When we think of retired professional athletes, we picture someone in their 40s with all the money in the world. But the truth is, that’s only a small percentage of them. It may shock you to hear that 78% of retired NFL players are bankrupt within two years of leaving the sport; basketball players fare better, but only slightly – 60% are in financial ruin within five years.1

But wait, how is this possible when they make millions over the course of their career?

Sure, the length of the average career is much shorter than you’d think (about three years for NFL players and just under six for NBA and MLB players), and most salaries are not making the headlines like the last big contract signed, but let’s not forget athletes like Mike Tyson, who was once worth around $400 million before declaring bankruptcy – before he retired!

Much like your working life, athletes only have a certain window in which they can really make money – only that window is much smaller. But without the proper plan in place, many soon find themselves in a precarious situation. And let’s be honest, living within your means also plays a key role.

A late-career professional is much like an athlete on their third contract. You’ve established yourself and are hopefully making more money now than when you were just starting out as a rookie. Now is the time to really look ahead at what your future may entail and begin to really look at your future post-work life and goals by tracking your spending for a full year to create a target budget. Sure, professional athletes retire in their thirties and have a lot of life ahead of them, but don’t underestimate the length of your own retirement (hint: it’s much longer than you may think).

Age Is but a Number

Many people believe aging begins to slow everything down. They go on fewer runs or engage in physical activities less and less. Pretty soon, they’re only celebrating triumphs while watching their favourite team rather than being the ones raising their hands in celebration.

But as George Burns once said, “you can’t help getting older, but you don’t have to get old.

Tom Brady won his seventh Super Bowl title at the age of 43. Nolan Ryan had his third-best ERA season at the age of 40 and was a finalist for the Cy Young Award for best pitcher in the league. Even Mr. Hockey himself, Gordie Howe, scored 15 goals and had 26 assists in 80 games in his last season in the NHL…at the age of 52!

But you don’t need to be a professional athlete with a much larger bank account to prove that aging doesn’t mean stopping. For example, we recently noted an 83-year-old CrossFit athlete, Jacinto Bonilla, who can deadlift 325 pounds and squat 250 pounds.

(Source: CrossFit South Brooklyn Instagram)

The key is not to let others dictate to you what you can or should be able to do. There’s no reason why you can’t be the one raising your hand in victory rather than watching it happen on tv if that’s what you want to do – incredible accomplishments are not limited to a specific age range.

Don’t Let Others Tell You When to Retire

Tom Brady famously “retired” for 40 days before deciding to return to the NFL. Whether Brady’s decision to return was in response to a report by Adam Schefter breaking the news before he was able to, or just simply missing the game, retiring on your own terms is important.

The reality of the pandemic and its lasting effects has thrown a wrench into many retirement plans. A recent survey by the Royal Bank of Canada found that 18% of respondents said they will now be retiring later than expected because of the pandemic.2 The survey also found that approximately one-third of respondents would consider returning to paid work to help bridge a shortfall during retirement.3

Choosing to postpone retirement or filling up your days with work or volunteering during retirement should be a matter of choice, not necessity. For those nearing retirement without a formal plan, the window of opportunity to consider your options and future lifestyle is shrinking – but that’s not to say it’s closed!

The Bottom Line

Just because they make money most only dream about, athletes are just people like the rest of us. They go through the same stages of a career like many of us and can suffer some nasty pitfalls without the proper planning as well. But as you can see, most issues can be aided with the right financial plan for your post-work life.

Longevity is meant to comprise a portion of your retirement portfolio to provide additional lifetime income above what the government provides to meet your non-discretionary income needs. The balance of a traditional portfolio can be used to cover discretionary expenses and can be scaled up or down with market performance.