Irish rugby star Simon McDowell is currently the wealthiest rugby player in the world, even though his career ended abruptly due to an injury in 1990.

According to Ruck, the Sunday Times rich list stated that he had a net worth of £41 million in 2012. Yet, it was not his salary as a player or his work as a referee from 2002 onwards that earned him this fortune. McDowell also runs Kilwaughter Minerals, a hugely successful business that generates millions in profits every year.

While most rugby players are not likely to earn this much, the career trajectory that McDowell had is typical for an athlete because much of his wealth comes from his second career.

As a player, you may earn a higher-than-average wage from a young age. However, your career on the field will likely be relatively short compared to other professions, and you may need to find another source of income once you can no longer play professional rugby.

The average person, on the other hand, starts working and gradually increases their income over a span of decades before reaching a peak near the end of their working life. During this time, they can contribute to pensions and investments, and plan for their retirement.

Unfortunately, the unique career trajectory that you experience as a rugby player can make planning for later life more difficult. As a result, it is important to consider what you will do once you can no longer play professional rugby.

Read on to learn more about the specific retirement planning challenges that you may face as a professional athlete, and how we can help.

Rugby players must prepare for 2 retirements

Planning for one retirement is challenging enough but, as a rugby player, you likely need to plan for two.

According to Rugby Dome, the average rugby player in England retires from playing at age 34. However, you may have to retire earlier than this if you sustain a serious injury that leaves you unable to play. 

Additionally, you might find yourself out of contract at the end of a season, unable to find another club for various reasons. As a result, your playing career could end suddenly, and you may only have limited time to start saving for later life.

Consequently, after this “first retirement”, it is fairly unlikely that you will have enough savings to sustain your lifestyle without needing to work, especially as life expectancy is on the rise. 

As a result, you will likely need to find a different source of income and continue contributing to retirement savings until your “second retirement” when you finish working altogether.

The average retirement age, as reported by Indeed, is 65 for men and 64 for women. As such, you may have a gap of around 30 years or more between your first and second retirement.

If you fail to plan accordingly, you may find it difficult to have a comfortable second retirement. Fortunately, there are several ways that working with a financial planner could help.

4 ways a financial planner can help rugby players navigate 2 retirements

1. Managing cash flow

As a rugby player, you may come into a large amount of money at a young age, before you have had a lot of experience handling your own finances. As such, you may be prone to overspending and could fail to contribute to retirement savings or an emergency fund, for example.

The good news is, a financial planner can help you manage your cash flow at this stage so you can start working towards long-term goals.

Additionally, after your second retirement, a financial planner can help you manage your spending to ensure that you draw from your retirement savings in a sustainable way.

In both scenarios, they may be able to use cashflow planning to create a clear, visual representation of your finances, so you can consider what a sustainable level of spending could look like. 

This can also show you how different expenses, like travelling or buying a new home, could affect your financial plan and retirement savings.

2. Building savings and investments for retirement

During your sporting career, you are likely to have a high income but a relatively short window in which to build retirement savings. 

To add to this, your income after retiring from sport is not guaranteed, so it is important to make the most of this opportunity to save for retirement while you have money regularly coming in.

However, you may find this challenging if you are relatively young and lack knowledge about pensions or investments.

A financial planner can explain all these things in an accessible way, and help you start building a healthy retirement fund during your playing career.

When you begin your second career, they can revisit your financial plan and adjust your pension contributions and investment strategies, so they align with your new level of income. They can also incorporate any new life goals you may have.

3. Tax planning

As a professional rugby player, you may be in a high tax bracket, so you could lose a significant portion of your wealth to tax.

Fortunately, there are ways to reduce the tax that you pay, so you can retain more of your wealth and contribute more to your retirement savings.

A financial planner can discuss different ways to do this, including increasing pension contributions and making use of your ISA allowance, for example.

Additionally, after your second retirement, they can help you draw from your retirement savings in the most tax-efficient way possible.

4. Planning for a change in income

Your income could well drop significantly after your first retirement, even if only temporarily while you decide on your next steps.

Depending on what you do when your playing career ends, you may earn more or less than before.

This change in income will likely have a big effect on your lifestyle and your long-term financial goals. For example, if you earn less but continue spending at the same rate you currently are, you will likely quickly deplete your savings.

Conversely, if your income increases, you may have more opportunities to contribute to retirement savings or achieve other life goals.

A financial planner can help you plan for this change in income so you are able to sustain your lifestyle and make the most of any additional income that you may earn, while also preparing for later life.

Get in touch

If you are concerned about the prospect of managing two retirements, then please do get in touch with us at DBL Asset Management.

Email or call 01625 529 499 to speak to us today.

Please note

This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.

The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.

A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future results. 

The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates and tax legislation may change in subsequent Finance Acts.  

This article is for information only. Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.

The Financial Conduct Authority does not regulate cashflow planning or tax planning.