Retirement benefits vary greatly among the major professional sports leagues, but it is increasingly apparent that athletes should be conscious of how much support they will receive from their employers, versus how they can position themselves through qualified savings.

The National Hockey League Players’ Association fought extensively to convert the league’s defined contribution pension plan into a defined benefit plan absolving investment risk from its participants; however, not all leagues offer this type of security. Listed below are some steps players can take, no matter what their situation, to help plan for life after sports.

KNOW WHICH OPTIONS ARE AVAILABLE. While the most common retirement vehicle companies offer is the 401(k) plan, only three major sports leagues (the NBA, NFL and MLS) offer this option, where players can make elective contributions for tax-deferred savings (source: Brightscope).


In many cases, the retirement plan being offered may be funded by employer contributions, such as a pension plan or annuity. On the PGA Tour, contributions to the association’s pension plan are based upon how many cuts players make, their position on the end-of-season money list and how many events they play in a given year (source: Bloomberg). Having a working knowledge of how employee, employer and matching contributions are made is an important part of a player’s decision-making process when it comes to personal savings.

KNOW HOW LONG UNTIL ELIGIBLE TO PARTICIPATE. Despite the average career of a professional athlete in the major sports ranging from three to five years, there are a number of players who will not reach even that short length of service in their careers. In the case of leagues that offer retirement plans funded by employer contributions, there are varying degrees of service requirements before players become eligible to receive retirement compensation. The previously mentioned NHL pension plan is open to players as soon as they have played one game, while the employer contributions of the NFL across its multiple retirement plans range from two to four years of credited seasons (source: NHL Collective Bargaining Agreement (CBA), NFL CBA). If an athlete does not reach the level of service necessary to qualify, he or she will need to consult with a financial advisor to consider alternative ways to save.

Athletes should be conscious of how much support they will receive from their employers, versus how they can position themselves.

KNOW WHEN ONE IS ELIGIBLE TO RECEIVE PAYMENTS. Although Social Security, the most widely known retirement income stream, is not available until the athlete reaches age 62, at the earliest, each of the retirement plans offered by the major sports leagues has a different eligibility date to draw on those assets. Some are available as early as age 35, such as the NFL’s annuity plan, but require four credited seasons of service time before a player reaches eligibility (source: NFL CBA).


In many cases, a player’s voluntary choice to delay payments can substantially increase payments, as happens with Social Security. Based on players’ income needs and market expectations at the time, it is important to evaluate whether the internal rate of return offered for waiting for benefits makes sense.

DEVELOP A PERSONAL RETIREMENT SAVINGS PLAN. If the professional sports employer does not offer a plan which includes elective contributions, a player may consider alternative vehicles such as a traditional or Roth IRA, where contributions can grow tax deferred, and in some cases, tax-free.

Mapping out projected cash flows during prime earning years, and short- and longterm financial goals, with a financial advisor can also help a player determine his or her capacity for a savings plan.

Jeffrey S. Gerson and Shawn P. Landau are financial advisors with the Wealth Management division of Morgan Stanley in New York City. The views expressed herein are those of the authors and may not necessarily reflect the views of Morgan Stanley Smith Barney LLC, member SIPC, Morgan Stanley Financial Advisors engaged Worth to feature this article. Gerson and Landau may only transact business in states where they are registered or excluded or exempted from registration Transacting business, follow-up and individualized responses involving either effecting or attempting to effect transactions in securities, or the rendering of personalized investment advice for compensation, will not be made to persons in states where Gerson and Landau are not registered or excluded or exempt from registration. Morgan Stanley Smith Barney LLC offers insurance products in conjunction with its licensed insurance agency affiliates. Morgan Stanley and its financial advisors do not provide tax or legal advice. Individuals should seek advice based on their particular circumstances from an independent tax advisor. Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER and federally registered CFP (with flame design) in the US. CRC1383921 01/16

This article was originally published in the May–July 2017 issue of Worth.