America's Best Retirement Plan: NFL, NBA, NHL, and MLB Athletes' Pensions

In corporate America, the pension - for the most part - has gone the way of the dodo. There was a time when you'd work for a company for most of your life, and when you retired you'd get a fixed sum from your former employer every month. Now for the most part, it's all on the individual to provide their own pensions via a tripod consisting of your company retirement plan, personal savings and Social Security.

Professional sports, however, is another story. The major sports still have pensions, and players can qualify for them with far less playing time than the average Joe has to put in at a corporation. (That being the case, you have to wonder how any of them end of financially busted, like these Pro Athletes Who Went Broke.) After reading these, no one will blame you for turning green with envy.


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The NFL Pension Plan

In general, a player has to have at least 3 "credited seasons" in order to be eligible for an NFL pension. What counts as a credited season? Playing in at least 3 games during a season. (Technically, I think you merely have to be on the active roster, injured reserve or "physically unable to perform" list.) You also get credit if you are released but paid the equivalent of 3 game checks.

That said, the NFL's retirement package actually consists of 5 parts:


  1. Severance Pay Plan - A player with at least 2 credited seasons is eligible for severance pay, which at present is $15,000 for each such season. In order to collect this pay there must be a "separation of service," which is deemed as going 12 months without a contract.
  2. Player Health Reimbursement Account - A player with 3 credited seasons is eligible for the HRA, which consists of the Club contributing $25,000 for each credited season, up to a $300,000 maximum. Players can't make contributions of their own. The HRA can be used to pay for continuation of COBRA insurance coverage after termination of post-career medical insurance under the NFL Players Insurance Plan.
  3. NFL Player Annuity Program - After playing for four credited seasons, a player is eligible to receive a $65,000 annuity. However, a player can't receive the annuity until age 35 or five years after his last credited season, whichever comes later.
  4. NFL Player Second-Career Savings Program - This is the NFL's 401(k), and players are automatically enrolled in it. However, it isn't until the player has two credited seasons that the Club will being making it's matching contribution, which is $2 for every dollar that the player contributes, up to a maximum of $26,000 per year. Players can begin making withdrawals as early as age 45.
  5. Bert Bell/Pete Rozelle Retirement Plan - This is the NFL's pension plan, which requires players to have three credited seasons in order to be eligible. At present, the pension pays $470 per month for each credited season, and players can begin collecting benefits at age 55. Thus, a player who played four seasons from 2007 to 2011 would receive a monthly pension of $1,880 ($470 x 4).


With the average NFL career being about 4 years long, there's a good chance that many players probably qualify for all plans in the retirement package. Hopefully everyone contributes to the 401(k) plan, since it is 200% matching. (Plus, the average NFL salary is $1.9 million, so they've probably got it to spare.)


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The NHL Pension Plan



Average length of a player's career in the National Hockey League: 5-and-a-half years.


Average NHL player's salary: $2.4 million per year


The National Hockey League Pension Plan is pretty straightforward: Players must play in 160 games in order to be eligible. At that point, they are eligible for an annual pension of $45,000, which they can begin drawing at age 45.



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The NBA Pension Plan

The NBA retirement package has two components, both of which are pretty nice. First, there's a 401(k) plan with 140% matching. (Not as good as the NFL's 200%, but nothing to sneeze at). Thus, putting in the max of $17,000 means the NBA will tack on another $23,800 - it's like minting money!

The other component of the NBA retirement plan is the pension. At present, a player has to play for 3 seasons in order to be eligible. That amount of playing time will garner a pension of roughly $57,000 per year at age 62. (Players can start receiving reduced benefits at age 45.) The pension plan tops out at $195,000 for players with 11 or more seasons. In other words, someone who bummed around the league for 11 years will get the same pension as Michael Jordan, Shaquille O'Neal and any of the other marquee players of the game.

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The MLB Pension Plan


Major League Baseball must have one of the sweetest retirement deals around. Get this: you only have to play 43 days in the Bigs in order to qualify for a $34,000 annual pension! 43 days!!! And did I mention the healthcare? You only need one day in the majors to get lifetime healthcare coverage! (Obviously the fix for the healthcare crisis is to let everybody play in the majors for a day...)


The pension plan maxes out at $185,000 for those with 10 or more years in the league. Although the average baseball career only lasts about 5-and-a-half years, I don't think they'll be doing too badly. (Plus, the average salary is $3.3 million.)


(FYI: That giant sucking sound you hear is parents rushing out to sign their kids up to start playing baseball.)


Pro Athletes Pension Plan Poll

Are you surprised by how lucrative some major sport retirement packages are?

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Summary

Needless to say, professional athletes have an excellent shot at living a very comfortable life - even if they don't have a sports career that lasts very long by typical standards. Hopefully, most of them will recognize how fortunate they are and look for ways to take advantage of their position, such as those suggested in How Pro Athletes Should Invest Their Money.

(And on a side note, pure sports fans might want to check out my hub on The Greatest Basketball Player Ever: Wilt Chamberlain.)


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Comments 6 comments

Vince Hanna 4 years ago

Can a retired MLB player with 11 years in the league at age 47 draw their pension early?


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Hypersapien 4 years ago Author

I believe the normal retirement age is 62. If a player is allowed to withdraw their pension 15 years early as you suggest, it will almost certainly be with severely reduced benefits. (I would hope that if he were able to hang aroung the majors for 11 years that he set something aside for a rainy day so that taking an early pension wouldn't be necessary.)


been there 4 years ago

You may want to check your facts. Don't just get your info from other incorrect blogs. MLB players do NOT have lifetime medical benefits given them after 1 day of service. They have coverage for the rest of that season and the next but that is it if they are not on a major league 25 man roster. A retired player with 4 or more years of ML service has the opportunity to BUY the insurance for the rest of their lives. This cost is currently over $20,000 a year for that "benefit." Obviously NOT the fix for the healthcare crisis that Obamacare has made 10 times worse. At least the retired players who keep this "benefit" are paying for it with their own money and not someone elses.


Hypersapien profile image

Hypersapien 4 years ago Author

been there,

If you have a link I would certainly appreciate it, because all of the sources I reviewed (none of which I would characterize as "incorrect blogs") said the same thing. Moreover, it's important to remember that these are not benefits that have always been in place; many of them were bargained for over time, and not all of them are retroactive. Thus, a player from a previous baseball era might not be eligible for the same benefits as a current ballplayer.


rick cerone 3 years ago

mlb players play 43 days and get health benefits for life??? get your facts straight please.. I played 18 years and i'm still playing 25k a year for coverage,, since I retired in 1992, I have paid over $325,000 in premiums.. So check your facts....


bill bordley 3 months ago

have 3 years on MLB Pension. Agree with and see rick cerone's comment....

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