Workplace retirement plans for pro athletes

You might not think pro athletes earning millions would have to worry about the risk of outliving their retirement savings. But when you consider their retirement could conceivably stretch 50 years or more, that risk isn't so far-fetched.

Even with the most popular major sports leagues offering such benefits as pensions and 401(k) plans with employer matches, an athlete's relatively short career could make it hard to save adequately using those plans alone.

"They're not going to be able to put away in qualified retirement plans enough money to live on," says Andre Mirkine, president of the Sports Financial Advisors Association. (Qualified plans refer to those with tax advantages.)

"Then it's incumbent upon the advisers who advise them to try to convince them to save," he adds.

Sometimes, former athletes run out of retirement savings chasing after wild investment deals, says Pete D'Arruda, a Cary, N.C., financial planner who frequently advises athletes.

"Many athletes take a lot more risk than they should after their playing careers," D'Arruda says.

Players in these seven sports organizations, at least, have a formal employer-provided benefit plan to get them started. But data from players unions and collective bargaining agreements show that, when it comes to retirement security, the playing field is decidedly uneven.

Baseball was the first U.S. pro sport to have a pension plan, starting in 1947. Today, players become eligible for the minimum pension after just 43 days of service time at the major league level.

MLB pensions are reputed to be among the most generous in sports. Players accrue full pension benefits when they achieve 10 years of service time, making them eligible for $200,000 a year for life (the maximum allowed by law in 2012) at the age of 62. The pension is joint-survivor, meaning surviving spouses are entitled to some pension benefits. In addition, MLB members with four or more years of major league service time are eligible to continue their health care coverage at a cost of at least 60 percent of their chosen plan.

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Retirement benefits of professional athletes