Professional athletes live the life that most people dream about. They enjoy large paychecks, big endorsement deals and national publicity. Throughout their careers, they are loved and adored by fans in their respective sports. Upon retirement, most professional athletes also have a league-sponsored pension plan to look forward to. Surprisingly, pension plans vary greatly among different sports, with some leagues providing players with lots of perks, and others offering players the bare minimum.
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NBA players have one of the most generous pension plans in all of professional sports. They are vested into their pension plans after playing at least three seasons in the league. The minimum benefit for a player that retires at the age of 62 is $56,988 per year - not a bad retirement for a three-year career. The maximum benefit for any player is $195,000, and it takes 11 years of NBA service to qualify for this benefit.
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 player's contributions up to 140%. (Learn more about retirement plans in Independent 401(K): A Top Retirement Vehicle For Sole Proprietors.)
The NFL could stand for "Not For Long," with the average career lasting only three years - just enough to qualify for the league's pension plan. The league's plan is based on years of service in the league. A player with the minimum three years of play would receive an annual pension check of $21,360 at retirement. On average, retired players receive an annual pension check of about $43,000.
Players who retired in the '80s and '90s receive anywhere from $3,000-5,640 per month for every season played in the NFL. Newly retired players (since 1998) receive $5,640 monthly for every year of service. Players with 10 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 up to 200%. (Housing your retirement plan inside a variable annuity contract offers some big advantages, but only if you are close to retirement. Find out more, in Should Your 401(k) Be In An Annuity?)
Major League Baseball has the best pension program in all of sports. A big league player needs just 43 days of service to qualify for a pension benefit. Forty-three days of service can guarantee an MLB player a $34,000 per year pension benefit. One day on an active roster qualifies a player for full comprehensive medical benefits.
Major league baseball players become fully vested in their pensions after 10 years of service. 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 half a billion dollars.
NHL players can start withdrawing their pension benefits at the age of 45. Players are not fully vested, however, until the age of 45. NHL pensions require that a player be active for at least 160 games to qualify for the maximum pension benefit. Players with less than 160 games of service receive the maximum benefit under Canadian law, and players with 160 games or more of service receive the maximum pension under U.S. law, which is $45,000 annually. (The maximum amount you may borrow from your qualified plan is either 50% of your vested balance or $50,000, whichever is less. Find out more, in Borrowing From Your Plan.)
The PGA has the most convoluted pension plan 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 also earn contributions of $3,800 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 account at the end of their career. The downside is that players that miss cuts and perform poorly will be left with virtually nothing in their pensions.
The Bottom Line
As you can see, athletes in different sports have totally different retirements to look forward to. 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 to work with.