While professional athletes often enjoy substantial wealth during their playing careers, the transition to life after sports can bring about significant financial challenges. Many athletes face difficulties in managing their finances and sustaining their wealth once they retire.
In this blog post, we will explore the financial problems that professional athletes face after retirement and discuss potential solutions to help them navigate these challenges successfully.
Overspending and Lifestyle Adjustments
One common financial problem faced by retired athletes is overspending. During their playing careers, athletes may develop spending habits that are not sustainable once their income decreases or ceases altogether. Maintaining the same extravagant lifestyle without a consistent source of high income can quickly deplete their savings.
To address overspending and make necessary lifestyle adjustments, retired athletes should:
- Create a realistic budget: Assess income, expenses, and future financial goals to develop a budget that aligns with their current financial situation.
- Prioritise financial discipline: Practise self-control and make conscious decisions about spending to avoid impulsive purchases and unnecessary expenses.
- Seek professional financial advice: Engage a financial advisor who specialises in working with athletes to create a personalised financial plan and provide guidance on managing wealth.
Lack of Financial Education and Planning
Many athletes focus solely on their sporting careers, neglecting financial education and planning for the future. They may not have the necessary knowledge or skills to manage their finances effectively, leading to poor investment decisions, inadequate retirement planning, and vulnerability to financial scams.
To address the lack of financial education and planning, retired athletes should:
- Educate themselves: Take the initiative to learn about personal finance, investment strategies, and retirement planning. Attend financial literacy courses or workshops to enhance financial knowledge.
- Engage financial professionals: Work with financial advisors, accountants, and lawyers with experience in athlete finances. These professionals can provide guidance on wealth management, tax planning, and estate planning.
- Establish an emergency fund: Create an emergency fund to cover unexpected expenses or income gaps during the transition to retirement.
To underline how issues with finances can affect former players, Australians may know the story of Lucas Neill, who was declared bankrupt in the UK back in 2016 due to several bad investments despite earning over $40m in two decades of EPL service. Some of his former Socceroos teammates claim Neill has practically distanced himself from them.
In August 2023, the Australian Sports Foundation (ASF) released a survey highlighting financial issues affecting current or former athletes, with 2,304 respondents. The data revealed that 46 per cent of the top athletes representing Australia between 18 and 34 years old were earning just below $23,000 a year, and had problems trying to earn a living despite being in active competition, with travel, training, and equipment costs a major factor. At least 40 per cent reported poorer financial standings than they were a year ago.
Worse, one of every two athletes training for the 2026 Commonwealth Games and 43 per cent of those preparing for the 2032 Olympics in Brisbane are entertaining the possibility of moving on from their sport, the survey added.
Mismanagement of Investments
Athletes may fall victim to poor investment choices, trusting their finances to unscrupulous advisors or making uninformed decisions. Investments in high-risk ventures or business ventures without proper due diligence can lead to significant losses.
To address the mismanagement of investments, retired athletes should:
- Conduct thorough due diligence: Research and evaluate investment opportunities carefully. Seek professional advice and conduct independent analysis before making investment decisions.
- Diversify investments: Avoid placing all financial eggs in one basket. Diversify investments across different asset classes to spread risk and potentially maximise returns.
- Review and monitor investments regularly: Stay actively engaged in the management of investment portfolios. Regularly review and reassess investment performance, as much as possible with a trusted finance advisor present.
Mental Health and Emotional Support
The transition from a successful sporting career to retirement can have a significant impact on athletes’ mental health and emotional well-being. Financial stress and uncertainty can exacerbate these challenges, leading to poor decision-making and a further decline in financial stability.
To address mental health challenges and seek emotional support, retired athletes should:
- Prioritise mental health: Seek professional counselling or therapy to manage the emotional and psychological impact of retirement and financial challenges.
- Establish a support network: Surround themselves with trusted friends, family members, and mentors who can provide emotional support and guidance during the transition.
- Leverage athlete associations and resources: Tap resources provided by athlete associations or foundations that offer financial counselling, career transition support, and mental health service. This support system may include counselling resources such as Lifeline (131 114), MensLine (1300 789 978), and beyondblue (1300 224 636), plus programmes under the Australian Institute of Sport.
Issues with mental health amongst athletes are noted in Australia’s sporting community.
Talking to ABC, Brumbies skipper Owen Finegan revealed that fellow Wallaby Dan Vickerman had been suffering from depression after problems with his right leg forced him to retire from the game in 2012; the depression led to his suicide five years later.
Former Test cricketer Nathan Bracken said his job prospects were nil after injuries forced his retirement from national duties, even a supermarket wouldn’t consider hiring him. Despite the gloom and legal woes with Cricket Australia, he was able to bounce back with a communications degree from Charles Sturt University, a short run in politics, and a successful account manager role with Boral.
In addition to the financial woes, the above ASF survey recorded that at least one in four respondent athletes reported mental health declines than a year before.
Conclusion
It can be a hard life for any athlete when the time comes they have to close their chapters on the field. The financial challenges faced by retired athletes require careful attention and proactive steps to mitigate risks and ensure long-term financial stability. It is essential for athletes to recognise the need for professional guidance and to be proactive in managing their finances to secure a solid financial future after they make their exit.
DISCLAIMER: This article is for informational purposes only and does not constitute official financial advice. 2 Ezi has no working relationships with any individual or organisation mentioned. Please consult your finance advisor immediately.
For financial and mental health concerns, please call Lifeline (131 114), MensLine (1300 789 978), the National Debt Helpline (1800 007 007), and BeyondBlue (1300 224 636).
