A football career is unique in so many ways compared to other lines of work. The physical toll it can take on your body while you also have to contend with fans, media responsibilities, and your public image all mean that you face numerous challenges in how you earn a living.
It’s perhaps unsurprising, then, that you also have different needs for how and when you plan for retirement.
According to research published by Standard Life, 36 is the age when people start seriously making arrangements for their retirement.
However, for you, this is likely to be too late for you to begin making plans for later down the line. Instead, you ideally need to be doing so from your very first year in professional football.
Read on to discover three key reasons why you need to start planning sooner than this.
1. Your career trajectory is different to those in other professions
One of the major distinctions between your career and other professions is the trajectory it takes.
Those in other occupations tend to gradually see their earnings increase throughout their working lives, reaching their earnings peak perhaps 10 years before they retire. This is often past age 50, and could even be age 60 or later.
That means starting to plan seriously at 36 largely makes sense. This gives them between 20 and 30 years to save and invest for the future they want.
But, the major difference between you and individuals in other professions is that 36 means something different to you.
Rather than starting to plan for retirement, you’re likely looking at retiring from playing professional football, if you haven’t already.
That means you’ll need to start thinking about this much earlier, ideally from the moment you sign your first contract and start your professional career.
Setting money aside from day one means you’ll be better placed to deal with the financial side of transitioning from playing to whatever you decide to do next.
Of course, you will also likely have a “second retirement” from your next career after football. That means you’ll have more time to prepare for this stage of life, saving and investing through this second career for when you’re older.
But in the short to medium term, you’ll need to contend with your first retirement when your playing career ends, and it’s vital to be financially prepared for this.
That’s why you arguably need to start saving from 18, rather than 36.
2. You might reach your peak earnings potential during your playing career
Another difference between football and other careers is when you hit your peak earnings potential.
Most individuals might not reach their highest salary until they’re 40 or older. Meanwhile, for you, it’s possible that you’ll hit yours much earlier. This could be in your late 20s or possibly into your early 30s, but is unlikely to be much later.
So, heading into a second career at age 36, you may have already passed your peak earnings potential.
That’s why it’s crucial to start actively planning during your playing career. This way, you’ll make the most of the money you earn on the field before your income potentially drops in your second career.
As you earn more from playing, try to save and invest the same percentage of your wages as they increase. This can help to ensure that the money you’re setting aside keeps pace with your lifestyle, rather than increasing your outgoings while your savings figure stays the same.
3. Starting younger can give your wealth the chance to achieve greater growth
Perhaps most important of all to consider is that starting younger can give your wealth the greatest chances of growth. That’s because more time invested can lead to better results.
Data from Schroders gives a good example of how this is the case. Using historical performance of the S&P 500 – an index of the 500 largest companies in the US – they found that you would have lost money 30% of the time had you invested over a period of 12 months.
Crucially, though, this chance of loss reduced over time, falling to:
- 20% over five years
- 10% over 10 years
- Almost 0% over 20 years.
Imagine that you’d only started investing for life after football at age 30, before retiring at 35. That would mean a 20% chance of losing value on your invested wealth.
Meanwhile, starting to invest from when you sign your first contract at 18 and then retiring at 35 would give your money 17 years in the markets, almost taking you to negligible risk of seeing your investment fall in value.
While past performance is not a reliable indicator of future performance, these figures go to show the potential power of giving your money more time in the markets.
If you’re in the middle of your playing career and are now concerned that you’ve left it too late to start planning, it’s important not to panic.
Remember the old adage: the best time to start was yesterday, the next best time is now.
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This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.
The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.