Image - Tennis ball and tennis net - Credit - Mathias David - Unsplash

Introduction

The careers of professional athletes are typically short but, depending on the sport, can be incredibly lucrative. Professional athletes tend to be relatively young and their professional careers are often the pinnacle of a sporting journey that may have begun in early childhood.

Whereas most of us look to retire in our fifties or sixties - or later depending on our personal circumstances and objectives – professional athletes must plan for their retirement at a much younger age.

So what are the six mistakes professional athletes make when it comes to planning for their retirement and how can these be avoided – number six might be the most important and potentially the most costly!

#1. They don’t plan for life after sport

When you’re successful at your chosen sport in your late twenties or early thirties, it can be difficult to focus on what life might be like after your sporting career is over. Your current focus is going to be on maintaining your fitness, your skill levels and achieving your and your team’s sporting goals.

It is worth bearing in mind that retirement might not be voluntary and might arise through injury, loss of form or having a contract terminated.

Having a rough idea of what life might look like after your sporting career means you have an opportunity to plan ahead even if you end up changing course later on.

For example, if you want a career in media, what training do you need, what opportunities are there and how suited are you for such a career – not everyone can be a tv pundit.

If you are looking for a career in finance, law or consulting, what qualifications do you need. What contacts can you make today that could help open doors for you when your sporting career has finished?

A few years before retirement is the time to consider what life might look like after sport and to start making connections that might get you ahead in any future career.

#2. They don’t save enough

When you’re young it is very tempting to spend every penny you earn. However, knowing that your sporting career may only last for a relatively short period means that you should be looking to save a proportion of your earnings for the future.

The key problem for most young people is that saving and investing don’t come naturally. Neither your family nor your friends may have engaged with a financial planner and so understanding personal finances can be challenging.

This is also not the time to put money into speculative investments but rather a time to put in place a coherent, long-term investment strategy which will provide the foundation for your future wealth long after your playing days are over.

Early in your career you want to get into the habit of making regular savings and investments and, as you get older, you want to increase the amount you save and invest.

Also, as you get older, you should consider what your future lifestyle might look like and what it might cost. This will help you to determine how much you need to save to enable you to go from the lifestyle you currently have to a lifestyle after you retire from sport.

#3. They don’t keep an eye on expenditure

When you earn significant amounts, it is easy to lose track of what you are spending. Young, high earning sports people are actively encouraged to spend with credit cards with almost limitless credit limits. It becomes normal to pay for things with your credit card knowing that the balance is cleared at the end of the month.

The problem here is that when you add credit card debt to hefty mortgage and car payments, it can easily add up. This is fine when your earnings are high but can be a huge burden when your earnings stop.

One of the key foundations of successful financial planning is to know how much income comes in and broadly how much goes out and to live accordingly. It sounds simple but can be incredibly difficult especially when you are used to buying whatever you want.

#4. They don’t take responsibility

When you are young and early on in your sporting career, when it comes to your finances, you may seek advice from your manager or coach, you may listen to your peers and team mates especially those who are older and more successful than you. You may also speak with your agent or the club that you represent. The harsh truth is that they may have their own interests at heart.

When it comes to your finances, you must take responsibility. This may involve finding your own trusted financial planner to work with which, I know, is easier said than done. As I have mentioned in previous articles, look for a financial planner with a good level of experience and qualifications – those with the Certified Financial Planner (CFP™) is a good place to start.

Once you have found your trusted financial planner, take the time to fully engage with the financial planning process. This is so important as, after all, it is your future lifestyle that you are planning for.

#5. They under-estimate their abilities

On the pitch, on the court or the running track, you have to have the ability, the confidence and the mindset to succeed. The attributes you need as a professional sports person are those that are required for life after sport. You need a positive mindset, you need grit and determination, you need to be able to be coached and managed and you need to be able to coach and manage others. You need to be disciplined, to be able to deal with set backs and to push forward.

These attributes are exactly what employers are looking for. The transition away from sport may seem daunting and may involve challenges but don’t sell yourself short when considering a future career.

#6. They forget to bring others with them

A successful sports person may receive accolades and be in the limelight but fundamental to their success is the support of a spouse or partner who, whilst in the background, has often had to sacrifice a great deal. They may have had to give up a career to support your sporting journey and they may have had to move away from family and friends. Whilst you focus on your career, they may be running the household, ensuring the children get to school on time and there’s food on the table.

The financial planning process should involve designing a lifestyle for everyone, for example, working out where you will live permanently, where the children will go to school and whether your spouse or partner’s career should now be prioritised.

Transitioning to life after sport can be incredibly challenging, after all sport probably defines who you are and dictates what you do most days, so you will need the support of those around you as you try to assume a new identity. Bringing your spouse or partner on this journey with you is incredibly important.

The transition away from a sporting career can put a strain on relationships and divorce can be incredibly expensive.

Conclusion

As a professional sports person you’re probably living your dream life, something that you’ve aspired to do since childhood. You may have enormous success and become a role model to many but life after sport can be very different.

We hear and read about athletes who suffer from poor mental health when they retire, they get divorced or are made bankrupt. With some forethought and sensible financial planning there is no reason why life after sport can’t be as fulfilling and successful as a career playing professional sport.