With the NFL currently in the off-season, I started thinking about an intriguing story that was revealed last year during the same time. Former Detroit Lion’s wide receiver, Ryan Broyles made headlines this past summer saying the he lived on a budget of about $5,000 per month. For many people, this a fairly common monthly budget, but for an NFL athlete, this is almost unheard of.
In this article, I will give you a financial advisor’s point of view and attempt to crunch the numbers for this scenario. Through this method, you’ll get an idea of approximately how much Broyles has saved, show you how much he needs to be financially independent, and allow you to learn how other athletes can benefit from Broyles example.
How much did Broyles save?
Before we can know how much Broyles has saved, we must first take a look at how much he earned. According to Sportrac.com, here are Broyles earnings over the past 4 years:
2012 – $390,000 (salary) + $1,115,272 (signing bonus) = $1,505,272 (total cash)
2013 – $557,205 (salary) = $557,205 (total cash)
2014 – $570,000 (salary) + $104,409 (roster bonus) + $50,000 (workout bonus) + $4,660 (incentive) = $729,069 (total cash)
2015 – $181,614 (salary) + $50,000 (workout bonus) = $231,614 (total cash)
Total cash earned over the past 4 years = $3,023,160
*Let’s assume Broyles is in the highest Federal tax bracket (39.6%), highest state tax bracket (4.25%) and Detroit city tax (1.2%). This totals a tax rate of 45.05%. Meaning after tax Broyles took home in the following year:
2012 – $827,147
2013 – $306,184
2014 – $400,623
2015 – $127,272
*Total net income earned over the past 4 years = $1,661,226
*After sticking to his budget and spending his $60,000 per year, he should be saving the following per year:
2012 – $767,147
2013 – $246,184
2014 – $340,623
2015 – $67,272
*Assuming he is invested in a balanced portfolio and was able to earn an average rate of return of 7% per year, we estimate that Broyles would have approximately $1,800,000 currently saved.
How much does he need to save in order to be financially independent?
Ryan Broyles is 27 years old today. For this example, we assume that Broyles will continue living on $5,000 per month (after tax) with a goal of being retired and/or financially independent by age 45. In order to make this assumption a reality, Broyles will need to generate $22,800 per month (before taxes) in order live the same lifestyle he’s grown accustomed to today.
Broyles ideal retirement nest egg is approximately $5,500,000.
*We now go back to our estimation that Broyles has approximately $1,800,000 saved at this point. Assuming he earns an average of 7% per year, if Broyles were to stop saving completely, his assets would grow to approximately $6,300,000 by the time he is 45 years old.
How can other athletes benefit from Broyle’s example?
According to the NFL Players Association the average career length is about 3.3 years, about the same amount of time Broyles has spent in the NFL thus far. According to Business Insider, the average NFL salary is approximately $1.9 million per year, well above what Broyles averaged per year. It’s clear that that Broyles did not earn a significant amount more than other active players at the time. It is because of the sound financial decisions Broyles made in his first 3 years in the NFL that he will be able to retire comfortably at age 45- that’s more than 20 years earlier than the average age of retirement.
My favorite line from the ESPN 30 for 30 film, Broke, says, “you can live like a king for a year or live like a prince forever!” Hat’s off to you Ryan Broyles: congratulations on putting yourself in a position to live like a prince forever, and being an excellent example for many future professional athletes!
By Elijah Souza
Investment Advisor Representative
*The above scenario is a hypothetical example and is not representative of any specific situation. Your results will vary. The hypothetical rates of return used do not reflect the deduction of fees and charges inherent to investing. Investing involves risk including loss of principal. No strategy assures success or protects against loss.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which course of action may be appropriate for you, consult your financial advisor.
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