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Financial Planning Tips For NFL Players

Best Practices to Build Sustainable Wealth

How do you turn your NFL earnings into wealth that lasts? Here are time-tested best practices that can help you transform your career income into a lifetime of financial security.

1. Create a Budget and Stick To It

  • A budget is your first line of defense for your wealth. Set up a budget for monthly expenses that allows you to achieve your savings goals. 
  • Find a system that helps you oversee your expenses conveniently, or use our recommended budgeting app. (Contact our office for access)
  • Consider enlisting a financial advisor to help monitor your spending. That adds another layer of accountability to help you fight temptation. 
  • Create a rule that you won’t exceed your budget or make a big purchase without consulting your financial advisor. 
  • Don’t forget to devote time to tax planning to reduce tax expenses.

2.  Develop a Strict Investment Strategy

  • Invest your entire NFL salary and bonuses. Live off your investment returns. Don’t touch the principal.
  • A critical element to your success is the amount of investment risk you take. With high earnings, you don't usually need to take significant risks.
  • Prioritize diversification, which can help lower your overall risk of significant drawdowns.
  • Avoid putting too much into one type of investment or speculative venture.
  • Because you have high earnings, focusing on tax-saving strategies can be preferable to taking on more risk.

3. Create a System for Family and Friend Requests

  • Requests for money are inevitable, but expensive mistakes can be made by saying yes too often.
  • Work with your financial advisor to create a reasonable budget for helping others and find ways to give the most tax-efficient way.
  • Set up a formal process for requests. Have an assistant field these, or have your financial advisor review them to determine which ones to consider.
  • This system allows you to respond to requests without awkwardness ("Please submit to my team, that’s the only way we can consider it.").
  • Don't be afraid to say no. Remember, your long-term financial security is not guaranteed, and you must prioritize your future well-being.
  • Family and friends aren’t usually aware of your short earnings window and high tax bills. Educate them to help lessen feelings of disappointment. 

4.  Choose Your Financial Professionals Carefully

  • Many athletes have lost significant money to bad advice or fraud. Always investigate advisors before hiring, even if referred by someone you know.
  • Not all advisors are required to put your interests first. Instead, insist on a fiduciary advisor, who is required by law to put your interests before theirs.
  • Ask any prospective advisor to put their fiduciary oath in writing for you.
  • Fee-only advisors don't earn commissions, so they are most likely to provide objective advice. Avoid commissioned or fee-based advisors.
  • NFLPA’s Registered Player Financial Advisors have undergone a detailed qualification process,
  • Look for high-quality credentials such as the CFA® or CFP® professional, which can help ensure the knowledge and training to serve you best.
  • Consider independent Registered Investment Advisors since their loyalty is to you, the client, not a parent company or shareholders.

 What about their services? Here's what to look for:

  • Planning driven—investments should not be the only focus. Risk management and tax minimization should also be top priorities.
  • Look for those with decades of experience guiding clients through all types of market conditions.

5. Philanthropy: Do You Want To Be a Role Model in Your Communities and Schools?

  • A professional athlete's ability to influence, inspire, and make substantial contributions to various causes puts them at the forefront of charitable activities.
  • Developing a clear mission, vision, and strategic plan for a foundation helps to ensure it achieves its objectives effectively.
  • Philanthropic efforts can shape an athlete's personal brand and public image.
  • Philanthropic efforts can contribute to an athlete's legacy beyond their professional career.
  • Philanthropic efforts can lead to collaborations with businesses that can last a lifetime.
  • Setting up a charitable foundation offers professional athletes several tax benefits including income tax deductions, estate tax benefits, capital gains avoidance.

6. Tax Planning

  • Effective tax planning strategies are crucial for maximizing your wealth and ensuring financial stability during and after your career.
  • Diversifying income sources through investments can provide athletes with more stable, long-term income streams that might be taxed at lower rates than their primary earnings.
  • Contributing to tax-deferred retirement accounts (such as 401(k)s or IRAs) can reduce current taxable income and allow earnings to grow tax-free until withdrawal.
  • Maximizing contributions to the NFL's pension plan can provide future income while reducing current taxable income.
  • Establishing a charitable foundation or making charitable contributions can provide significant tax deductions while supporting causes important to the athlete.
  • Utilizing trusts, life insurance, and other estate planning tools can help manage estate taxes and ensure the athlete's wealth is passed on according to their wishes.

7. Estate Planning

  • Estate planning for NFL Players involves unique considerations due to your high earnings, often short playing career, and the public nature of your career.
  • Effective estate planning ensures that your wealth is protected, managed, and distributed according to your wishes, providing for your family and contributing to your chosen causes.
  • A basic will outlines how assets should be distributed and can appoint guardians for minor children.
  • Trusts offer more control over how and when assets are distributed, can reduce estate taxes, and avoid the public process of probate. Athletes may use various trusts, including revocable living trusts, irrevocable trusts, and charitable trusts, depending on their goals.
  • A Financial Power of Attorney allows a trusted individual to manage financial affairs if you become incapacitated.
  • A Healthcare Power of Attorney appoints someone to make healthcare decisions on your behalf if they are unable to do so.
  • A Living Will specifies wishes regarding medical treatment and end-of-life care, ensuring your preferences are honored.
  • Professional athletes often face unique risks, including potential lawsuits or claims. Asset protection strategies, such as the use of certain types of trusts, can safeguard your wealth.

8. Retirement Planning

  • Professional athletes have two retirement milestones they need to plan for. One, when you retire from playing in the NFL and two, when you retire from your post-playing career at age 60 plus. 
  • The NFL has some of the best retirement plans in all of sports. The Annuity Program is a deferred compensation plan that provides long-term, tax-deferred earnings on contributions of your club until you chose to receive this benefit as early as 35 and five years out of the game.
  • There are two retirement plans available. The NFL Player Second Career Savings Plan helps you save for retirement in a tax-favored manner with contributions from the player which help to reduce earned income and contributions from your club. Your club will contribute $2 for each $1 you contribute. The Bert Bell / Pete Rozelle NFL Player Retirement Plan provides a pension, beginning between ages 55 and 65.
  • Begin planning for retirement as soon as possible, ideally from the onset of your NFL career, to take advantage of compound interest and to mitigate the risk of financial instability post-retirement.

9. Insurance Planning

  • The NFL provides some of the best insurance programs in all of sports including life insurance, medical and dental, and accidental death and disability insurance. You must be a player with a qualifying status of active, inactive, reserve/injured, reserve/physically unable to perform or practice squad.
  • Life insurance benefit ranges from $600,000 to $1,600,000 depending on your number of credited seasons.
  • Consider a decreasing term life insurance policy to cover your non-guaranteed portion of your contract value.
  • Vested players are provided with 5 years of additional medical and dental coverage.
  • The NFLA Benefits Book provides additional information on the benefits available to you here: NFLPA Benefits Book

Assembling a team of experienced advisors, including estate planning attorneys, financial advisors, and tax professionals, is key to developing effective financial planning that meets your unique needs and ensures your legacy.

Ready to translate today’s success into sustainable wealth? 

Schedule a complimentary consultation today.  Call me at 440-339-3550

Marc McLean, CFP®, AIF®, MBA
NFLPA Registered Player Financial Advisor

The information presented here is for informational purposes only. Accordingly, it should not be construed by any consumer and/or prospective client as McLean Financial Planning and Investment Management, Inc.'s solicitation to effect, or attempt to effect transactions in securities, or the rendering of personalized investment advice. Please consult legal or tax professionals for specific information regarding your individual situation. Before taking any action, it is recommended to consult a qualified expert on this subject such as an attorney, certified financial planner (CFP®) or certified public accountant (CPA). McLean Financial Planning and Investment Management, Inc. does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information. The information presented herein are my opinions based on years of experience.