Kai Ryssdal: Whether he stays in New York or winds up in Houston, Jeremy Lin is going to be a rich man. The Knicks have until tonight to match a three-year, $25 million offer from the Houston Rockets. And even though he’s only 23, it’s still not to early for Lin to start saving for retirement.
In fact, the NBA is going to do some of the planning for him. Starting this coming season, players will be automatically enrolled in a retirement plan. Because having a lot of money doesn’t make you good at managing it.
Marketplace’s Mark Garrison reports.
Mark Garrison: Players lucky enough to make it to the NBA can live large: big houses, big cars, fistfuls of bling. The average salary is more than $5 million a year. But what happens when the cheering stops? A few lucky players land gigs as sports announcers. But many struggle financially.
Ed Butowsky of Chapwood Capital Investment Management advises a number of current and retired pros. He says the stats are stark. Apart from the very highest-paid players:
Ed Butowsky: Over 90 percent will be bankrupt or in financial distress by the time they are 50 years old.
Bad real estate investments, businesses gone south, homes and cars repossessed. The stories are common. Butowsky works to give clients a better ending. Athletic careers are short, so even though some players go pro as teens…
Butowsky: They have to manage their money as though they are 60-year-old men about to retire.
That doesn’t come easily to guys under 30. Accountant Carrine Reilly has a number of athlete clients.
Carrine Reilly: They don’t have the concepts of how you save for the future, how you manage your money, what are the things that you should do, in steps, because it all comes up front.
Athletes aren’t the only people who do stupid things with their money when they’re young. But there’s a key difference, as Merrill Lynch financial adviser and former NFL player Reggie Wilkes explains.
Reggie Wilkes: The money they make in their 20s must cover their living expenses for 40, 50, 60 years.
And saving for that may prove as tough as anything they face on game day.
I’m Mark Garrison for Marketplace.