Unless you’re a teacher or work for the government, you probably won’t be getting a pension. And even if you’re in a union and will be getting one, it probably won’t be for hundreds of thousands of dollars a year. But if you’re a Major League Baseball player who’s managed to stick around in the big leagues for a while, you’ll be getting a generous pension check in your retirement.
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Players with 10 or more years of Major League Baseball experience who start taking their pension at age 62 will get $210,000 a year, according to the Society of Actuaries, a professional organization for actuaries founded in 1949.
Receiving that much isn’t dependent on the player’s salary, either. The league’s plan stipulates that anyone making over $68,212 a year is eligible, but the average salary in the league last season was over $4 million, so it shouldn’t be a problem to reach that threshold.
The plan’s sponsor, the Pension Committee of the MLB Benefit Plan, is responsible for securing funding for the pension. According to the notes in the audited plan financial statement, baseball clubs contribute and “contributions are agreed to in the aggregate by the Players Association and Clubs for the term of the Agreement,” according to Lisa Schilling, Fellow of the Society of Actuaries.
A spokesman for the MLB Player’s Association declined to comment because the pension is a topic that’s likely to be raised during the current round of collective bargaining with the owners.
These numbers are based on 2014 data, which is the latest publicly available. The Society of Actuaries intends to update it with 2015 data when it’s released in early 2017, according to Schilling.
Many players who were in the big leagues for over a decade made a lot of money, so $210,000 might seem insignificant. David Ortiz of the Boston Red Sox, who is 40 years old and known as “Big Papi,” is now retired, after his team lost to the Cleveland Indians on Oct. 10, and he has made over $160 million in salary during his 20-year career.
Another athlete who is retiring this year who made an exorbitant amount of money is Alex Rodriguez of the New York Yankees. Even though he lost out on a year of salary after being suspended for the 2014 season for using performance-enhancing drugs, the 41-year-old will make an estimated $480 million from salary, bonuses, incentives and endorsements in his career, according to Forbes.
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But of course, most baseball players play fewer than 10 years, and their prorated pensions are very important to them.
Also, some professional athletes struggle to keep all the millions they earn, and for them the guaranteed income from the pension could provide security.
MarketWatch has spoken with several athletes over the past few years about their finances. Former NFL player Phillip Buchanon’s mom said he should buy her a million-dollar home. He wrote a book called “New Money: Staying Rich,” in which he says athletes need to know the difference between “need” and “want,” and that it’s important for players to have a mentor, especially for financial advice if they didn’t grow up with a positive role model.
And NFL player Trent Richardson’s family spent $1.6 million of his money in less than a year.
Alex Rodriguez probably won’t need help protecting his money. And he’ll start his retirement by making $21 million next year as part of his agreement with the Yankees. The $21 million is the final of a 10-year, $275 million contract — even though he won’t be playing. He’ll serve in an advisory role with the team next season.
