Planning for the Unexpected: Financial Tips for Unpredictable Careers

A pro athlete can make at least a six-figure salary, but will likely retire before age 30. The average career ranges from five to seven years.¹ That can leave quite a long retirement to fund, particularly compared to the 40 or 50 years that a typical professional has to build his or her nest egg. In a similar vein, Broadway performers can make it big, but long-running shows are rare and showbiz success can be fleeting. So, while a 10%-15% annual savings rate may work for a doctor or a lawyer, a professional athlete or entertainer should consider putting away even more for the long-term.

If you are young or inexperienced with money, you may be tempted to live what some might deem the “celebrity lifestyle,” which can set you up for financial peril, especially if your playing or acting career takes a sudden turn. You may need to save as much as 50% of your current income to build a big enough cushion. The higher savings rate will help you stash enough away for an emergency or work stoppages, while also helping to set you up for financial security in a longer retirement.

Family and friends may come to you with their hands out. Whether it’s helping parents buy a new car or covering a friends’ vacation expenses, excessive spending on loved ones can become financially unsustainable—and a hard habit to break. Generosity is a great trait, but be thoughtful and selective about it. Doing so will help you set expectations about your largesse, sidestep awkward conversations and avoid potential financial troubles down the road. Also, keep in mind that hard cash isn’t your only capital. Celebrities often get free tickets, clothing and other valuable items that can be gifted to others.

Wealth can make you more of a target to fraudsters, from sketchy investments and real-estate schemes to various forms of cybercrime and theft. One way to protect your personal accounts is to set up a separate operating account, from which you pay bills and other expenses, without providing direct access to your primary account. This can also simplify your accounting.

It's also essential to follow good cybersecurity practices. Taking easy, simple precautions can sharply lower your odds of becoming a victim. For example, when traveling for an away game or an overseas performance, avoid using public Wi-Fi connections, which hackers can access to intercept your digital activity. Instead, rely on a mobile hot spot or virtual private network (VPN) for encrypted internet access. Keep your Financial Advisor informed of where and when you’re traveling, so that he or she can keep an eye out for unusual account activity and block fraudulent charges.

Not all athletes generate a steady income from their sport. Olympic hopefuls, for example, often hold part-time jobs or stitch together income from prize money, sponsorships and speaking fees to support their athletic careers. In such cases, nonprofit sports foundations can be a source of funding. They can front the cash you need for competition, while you preserve your podium earnings for the future. 

It can be devastating to end your career because of injury, especially if you are still young, but it doesn't have to mean the end of your working life.

Many athletes and performers move on to successful second careers, either going into business for themselves or even returning to school to pursue a professional degree. Keep an open mind about the possibilities and develop a network so that you are prepared to take the next step in your career, if and when the time comes.

You may have a coach, a trainer and an agent, but you should also have a Financial Advisor who can work with you and those in your trusted inner circle on a wealth plan tailored to your needs. In addition to managing your investments, a Financial Advisor can help you prioritize your everyday spending needs and longer-term investment goals.

While your expertise is within the lines of competition, big-screen or stage, it’s important to avoid feeling invincible when it comes to money. Get in touch with a Morgan Stanley Global Sports and Entertainment Director or Financial Advisor who can help you develop a sensible long-term plan for your wealth. Then you can enjoy your success knowing that you are more prepared for whatever the future holds.