Why Overpaid Athletes Go Broke

What happens to many athletes and their money is indeed hard to believe. It’s no secret that professional athletes have salaries that are in the millions, but they also have a poor record of financial success. A recent study showed that by the time NFL players have been retired for two years, 78% have gone bankrupt. Within five years of retirement, an estimated 60% of former NBA players are broke, and 70% MLB players go broke after retiring. So, where do they go wrong? First, unlike people who work 30-50 years at a standard job, athletes have a small earnings window and have to manage their income to last for the rest of their lives. Even worse, many players trust their money to attorneys and other advisors who steer them into overly risky investments that later leave them bankrupt. Of course, there’s always extravagance. Many professional athletes buy flashy cars, multiple homes, take extravagant trips, and generally lead lavish lifestyles. They focus on the accumulation of “stuff” instead of investing in long-term money management. Spending, rather than saving, is the single biggest downfall of professional athletes.