I built an athlete retirement calculator, and here is the breakdown of what the inputs are and how to use it, as well as a few caveats.
Let’s start with a walk through of what the inputs mean:
Annual Spending During Career: Just what it sounds like, outside of taxes and commissions/fees, how much do you spend each year while you are under contract?
Current Assets: Your current investment savings, probably doesn’t make sense to count the value of a house or anything.
% of Contract You Keep: Athletes only keep 40-60% of what they make after taxes and other costs are factored in. If you know what you keep, punch it in.
The rest of the sections are simple, they are current contract length and earnings per year (before taxes and fees) and there are two more identical sections so you can look at two additional contracts after your current one.
A few important comments. I made no attempt to factor in capital gains taxes over time, which would start to be a bigger factor decades down the line. I made no allowance for pensions or social security or the retirement account that is being maxed out each year by some of the leagues. Those would all be additive.
I assumed the portfolio gets 7% returns for the length of the combined contracts. Once the final contract is done, the balance of the portfolio is divided by 25, in other words, allowing the spend of 4% of the portfolio each year. Very simplified version of planning, but also very practical.
If you wanted to add in something like a house purchase, but didn’t want to mess up the other calculations, you could factor it in by subtracting the amount you pay for it from “Current Assets”, yes, it will work even if that makes the Current Assets number negative.