Fame, Fortune, and Pension Plans

After retirement, most professional athletes have a league-sponsored pension plan to which they can look forward. Surprisingly, pension plans vary greatly among different sports, with some leagues providing players with lots of perks, while others offer players the bare minimum.

Many professional athletes live the life that most people can only dream about. They enjoy large paychecks, big endorsement deals, and national publicity. Throughout their careers, they are loved and adored by their fans. But what happens when their professional sports careers are over?

Key Takeaways

  • Professional athletes earn high incomes, but often have relatively short careers lasting just a few years in many cases.
  • Professional sports leagues offer their players generous retirement plans, including both 401(k) plans and defined-benefit pensions.
  • The MLB has the best pension program of all professional sports, requiring just 43 days of service to qualify for benefits.
  • The PGA's pension plan is the most convoluted—the amount in a golfer's retirement account depends on performance and is not guaranteed.

NBA Most Generous Plan

NBA players have one of the most generous pension plans out of all professional sports. They are vested into their pension plans after playing at least three seasons in the league. The average benefit in 2016 for a player who retires at the age of 50 is $38,000 per year—not a bad retirement for a three-year career. A 10 year veteran can gross $102,000.

But that's not all. NBA players are also eligible to participate in a league-sponsored 401(k). Do you think your 401(k) plan is good with a 50% matching policy? The NBA matches a player's contributions up to 140%.

NFL 3-Year Pension Plan Qualification

The NFL could stand for "Not For Long," with the average career lasting only three years. But that's just enough time to qualify for the league's pension plan. The league's plan is based on years of service in the league. A player with a minimum of three years of play reportedly receives an annual pension check of $21,360 at retirement. On average, retired players receive an annual pension check of about $43,000 in 2014.

Players who retired in the 1980s and 1990s reportedly receive anywhere from $3,000 to $5,640 per month for every season played in the NFL. Newly retired players since 1998 receive $5,640 each month for every year of service. Players with 3 years of service receive an additional retirement bonus in the form of an annuity.

Players are eligible to receive their full benefits at the age of 55. While the pension plan is much worse than other sports, the NFL does offer a generous 401(k) plan. The league matches every player's contribution by as much as 200%.

MLB $34,000 Yearly Benefit

Major League Baseball has the best pension program of all professional sports. A big-league player needs a short amount of time—just 43 days of service—to qualify for a pension benefit. Forty-three days of service can guarantee an MLB player almost $9,000 per year pension benefit. One day on an active roster qualifies a player for full comprehensive medical benefits.

MLB players qualify for an annual pension after 43 days of service and for full comprehensive medical benefits after one day on an active roster.

Major league baseball players become fully vested in their pensions after one day of service if they retired after April 1, 1980. It is not uncommon for retired baseball players with over 10 years of service to receive over $100,000 annually upon reaching the age of 62. Baseball has the most well-funded pension program with estimates valuing the plan at over 2 billion dollars.

NHL Full Vesting at Age 45

NHL players can start withdrawing their pension benefits at the age of 45, and become fully vested as soon as they play at least 20 games. NHL pensions require that a player be active for at least 800 games to qualify for the maximum pension benefit. Players with less than 800 games of service receive a prorated amount, and players with 800 games or more of service receive the maximum pension under U.S. law, which in 2020 is $285,000 annually. 

PGA Performance-Based Retirement

The PGA has the most convoluted pension plan out of all of the major sports. The amount of money in a professional golfer's retirement account is not guaranteed. It is based on their performance during the season, position on the money list, and the number of cuts made during the season. Players are rewarded with contributions for participating in and playing well in tour events. Players earn funding as they participate in more and more tour events. Players reportedly earn contributions of $4,800 and up for each cut that is made.

The best part of the PGA's pension plan is that successful players can accumulate millions of dollars in their retirement accounts at the end of their careers. The downside is that players that miss the cuts and perform poorly will be left with virtually nothing in their pensions.

The Bottom Line

Athletes in different sports have totally different retirements to work toward. Whereas athletes in MLB and the NBA can look forward to fat cushy paychecks after their playing days are over, NHL and NFL players will have significantly far less with which to work.