Broke NFL player says Don't invest in a 401k

[scrabbler1]

Most people have steady incomes which hopefully will gradually grow over their working careers. This makes it pretty tough to front-load spending even though many people run up lots of debt trying to do so (and become overwhelmed with it).


But pro football players often earn huge sums of money for a few years, like winning small lotteries in that time. They then spend way too much, not realizing (or ignoring) that those big incomes will end, often pretty quickly and often unexpectedly (i.e. from injuries). They then get saddled with the debts they ran up and can't repay, or with costly upkeep of expensive properties. Combine this lack of LBYM with the absence of common-sense financial advice and you have a recipe for financial disaster when it all comes tumbling down.

[athena53]

Quote:

Originally Posted by Senator Most football players have the IQ of a dim light bulb.

It doesn't help that many high schools and universities supply the bare minimum "education" to their athletes. I once interviewed a candidate for an actuarial job who turned down one football scholarship because he wanted to major in engineering and they didn't allow their scholarship athletes to study anything that demanding.

There are exceptions, of course: the oral surgeon who placed my dental implants (and who will place any future ones I need if he's available) is an MD and a DDS who played football for K. U.

[pb4uski]

Quote:

Originally Posted by Senator He graduated because he played football, not because he had the academic qualifications to graduate... And HS as well. Most football players have the IQ of a dim light bulb.

Certainly a broad stereotype.... and true in some cases....but on the other hand, today's high end Division 1 college and pro offenses and defenses are very complicated so today's successful players, especially skill players, are actually pretty smart cookies.

Matt Patricia is a great example. He is the defensive coordinator for the 5-time world champion New England Patriots. He played on the offensive line at RPI and has a degree in areonautical engineering... a rocket scientist playing football. Similarly, I don't think anyone would term Tom Brady, Aaron Rodgers, Peyton Manning and the other marquee QBs as dim light bulbs and the same with many of the marquee middle linebackers, etc.

[Senator]

Quote:

Originally Posted by pb4uski Certainly a broad stereotype.... and true in some cases....but on the other hand, today's high end Division 1 college and pro offenses and defenses are very complicated so today's successful players, especially skill players, are actually pretty smart cookies. Matt Patricia is a great example. He is the defensive coordinator for the 5-time world champion New England Patriots. He played on the offensive line at RPI and has a degree in areonautical engineering... a rocket scientist playing football. Similarly, I don't think anyone would term Tom Brady, Aaron Rodgers, Peyton Manning and the other marquee QBs as dim light bulbs and the same with many of the marquee middle linebackers, etc.

Very true. Maybe only the professional football players that are felons have a low IQ... That's only about 30% of them.

[Huston55]

Quote:

Originally Posted by pb4uski Certainly a broad stereotype.... and true in some cases....but on the other hand, today's high end Division 1 college and pro offenses and defenses are very complicated so today's successful players, especially skill players, are actually pretty smart cookies. Matt Patricia is a great example. He is the defensive coordinator for the 5-time world champion New England Patriots. He played on the offensive line at RPI and has a degree in areonautical engineering... a rocket scientist playing football. Similarly, I don't think anyone would term Tom Brady, Aaron Rodgers, Peyton Manning and the other marquee QBs as dim light bulbs and the same with many of the marquee middle linebackers, etc.

RPI...that Division III ‘Liberty League’ football powerhouse where they learn to spell.

[travelover]

I wouldn't take financial advice from someone who spends all day banging his head into more or less immovable objects.

[JoeWras]

Tough crowd! Sheesh.

[aja8888]

Quote:

Originally Posted by JoeWras Tough crowd! Sheesh.

Obviously no ex-football players here!

[Senator]

Quote:

Originally Posted by aja8888 Obviously no ex-football players here!

I think the football players (and the NFL) bring it on themselves. My (former) employer could have paid me a lot more money if my workplace was provided for my employer free.

And if my employer could have been taxed as a non-profit, even more money. And pay me even more if non-customers were forced to buy the employers services as part of a 'package', whether or not the customer wanted the service... the list goes on. If Weinstein was an NFL player, he would still be playing.

[brucethebroker]

Maybe headline should read "Broke NFL former employee....", since he never played a game?

[brucethebroker]

Quote:

Originally Posted by scrabbler1 But pro football players often earn huge sums of money for a few years, like winning small lotteries in that time. They then spend way too much, not realizing (or ignoring) that those big incomes will end, often pretty quickly and often unexpectedly (i.e. from injuries).

Yeah, I have always thought taxing them based upon a 10-30 year average or something would be more fair than having to pay the highest tax bracket for a few short years.

[Chuckanut]

Interesting post.

I was listening to a well known radio talk show consumer advocate talk about his investment presentations he makes to professional athletes. He just gives advice and is not selling anything as far as I know.

He says the younger players are mostly not paying attention, the older players (30+) are listening, and the coaches, managers, etc. are hanging on every word.

[mystang52]

Slightly off topic, but I don't get the "complaints" about paying taxes on 401K withdrawals. Did the complainers - and those FA's - forget that the 401K's were funded by pre-tax dollars? What am I missing?

[JoeWras]

Quote:

Originally Posted by mystang52 Slightly off topic, but I don't get the "complaints" about paying taxes on 401K withdrawals. Did the complainers - and those FA's - forget that the 401K's were funded by pre-tax dollars? What am I missing?

You are missing nothing. This guy's focus is not in the right place. RMDs are just a part of planning. He strangely focuses on it. But, hey, home equity loans are just fine. Go figure.

[braumeister]

cake.jpg

[Huston55]

Quote:

Originally Posted by brucethebroker Yeah, I have always thought taxing them based upon a 10-30 year average or something would be more fair than having to pay the highest tax bracket for a few short years.

Interesting thought. Would you advocate the same for all professions? Wall Street brokers & bankers? Real Estate brokers? Lottery winners? Etc?

[pb4uski]

Quote:

Originally Posted by mystang52 Slightly off topic, but I don't get the "complaints" about paying taxes on 401K withdrawals. Did the complainers - and those FA's - forget that the 401K's were funded by pre-tax dollars? What am I missing?

You are missing nothing. We see the same thing very often on this forum regarding the "tax torpedo".... many people seem to forget that these savings were tax-deferred and not tax-free and resent that they have to pay tax on withdrawals... especially where they expected their tax rate in retirement to be lower than while they are working and deferred the income and as it turns out they were more successful than they expected and their tax rate in retirement is higher than they expected or even higher than when they were working and deferred that income. The problem is that they knew, or should have known, that risk when they deferred the income.

[bclover]

Quote:

Originally Posted by Senator He graduated because he played football, not because he had the academic qualifications to graduate... And HS as well. Most football players have the IQ of a dim light bulb.

Hey!!
The old guy and son #2 are both college ball players. Lol look as with every situation you cannot blindly go through the motions without being engaged.
My son had no illusions that he was going to go pro. We stressed to him how great an opportunity to go to college for free and travel. He was on a partial football scholarship He's graduating in june with a dual degree in Business and public relations
As for this guy. Simply another guy hanging a shingle.

[Huston55]

Quote:

Originally Posted by pb4uski You are missing nothing. We see the same thing very often on this forum regarding the "tax torpedo".... many people seem to forget that these savings were tax-deferred and not tax-free and resent that they have to pay tax on withdrawals... especially where they expected their tax rate in retirement to be lower than while they are working and deferred the income and as it turns out they were more successful than they expected and their tax rate in retirement is higher than they expected or even higher than when they were working and deferred that income. The problem is that they knew, or should have known, that risk when they deferred the income.

+1

It would be great to see an analysis that quantifies the benefit (all other things being equal) of using tax-deferred accounts (Net Present Value comparison, % comparison or, X-factor comparison). I’d expect that already exists somewhere, if someone knows of it and wants to post it.

[TuborgP]

Quote:

Originally Posted by pb4uski You are missing nothing. We see the same thing very often on this forum regarding the "tax torpedo".... many people seem to forget that these savings were tax-deferred and not tax-free and resent that they have to pay tax on withdrawals... especially where they expected their tax rate in retirement to be lower than while they are working and deferred the income and as it turns out they were more successful than they expected and their tax rate in retirement is higher than they expected or even higher than when they were working and deferred that income. The problem is that they knew, or should have known, that risk when they deferred the income.

I say with great pride that we are almost 70 and in the 28th tax bracket. Paying more than we need to wasn’t a goal but needing to was.