For professional athletes, race car drivers, and other high-earners, your financial situation is uniquely complex.
Earning income across multiple states requires complicated paperwork and tax withholding. Sign-on bonuses, endorsement deals, and appearance payments ebb and flow over time, and your earnings can be wildly inconsistent from month to month. Then there’s the risk of injury and an immediate loss of income. A career with a short period of high earnings is hard to plan for. But the reality is, in these careers, that financial planning is the most critical.
So how can a pro athlete, driver, or other high-earner plan for the future but still enjoy the fruit of their career?
For many young pro athletes, their first signing bonus is the biggest chunk of change they’ve ever seen. Take Trevor Lawrence, for example. As the first round pick for the Jacksonville Jaguars, he received a signing bonus of over $22M.
While staggering paychecks like that aren’t exactly the professional sport norm, the point stands. You can’t let a figure like that just sit in a savings account. And while you should be maxing out your tax-advantaged 401(k) and IRA accounts, you’ll hit your yearly limit in a flash. At that point, you need a tax-savvy investment strategy that shelters your earnings and gives you a solid retirement benefit.
Cook Wealth can help you build an investment portfolio that combines short-term and long-term assets and meets your risk tolerance. With our Environment, Social, and Governance (ESG) investing options, we can even put together a strategy that offers healthy returns and supports the causes that matter most to you.
Hope for the best, but plan for the worst
Another major consideration for young athletes is career longevity. Injury and immediate loss of income is a real possibility that should be planned for.
One way we can plan for major changes is by offering a sort of two-phased investment strategy. We can keep a portion of your portfolio easily liquidated in the event of an immediate, pressing need. That gives athletes and high earners the opportunity to recover (physically and emotionally) from the transition before they must find a new employment option.
Even frequent employment changes, like being traded to another team or signing a new endorsement deal, should be navigated with a financial professional. At Cook Wealth, these considerations are nothing new. We’ll handle the financial logistics and keep you in the loop every step of the way.
Partner with a professional when it comes to $$$$$ purchases
So many young athletes and high earners celebrate their signing bonus or first big check with a Lamborghini, California mansion, and a new wardrobe. While these big purchases are undoubtedly exciting, a lifestyle of big spending can leave you empty-handed and emotionally unfulfilled later in life.
You need a partner to help you plan for the future and navigate those big purchase decisions. That doesn’t mean high earners can’t have some fun! But a strong financial plan can help you balance today’s wants with tomorrow’s needs.
When you have high income, and varying streams of it, you don’t have the time or bandwidth to manage it on your own. And, with numerous complicated tax considerations, you really shouldn’t be.
At Cook Wealth, we can help by keeping the fun and finances in balance in the early years of your career, so that what you bring in now can keep you safe and secure in your golden years.
If you have questions about your investment strategy or how to maximize your take-home pay, our wealth advisors can help. Give us a call or send your question directly to our team. We look forward to connecting with you soon!
Do you have a quick question about tax or financial planning? We’d love to help. Grab a 15-minute spot on our calendar or send us a message below.