While the 11,000 athletes at the 2020 Tokyo Olympics look to cover themselves in glory during the games, they may still struggle to make ends meet when they get back home.
The athletes' rights group Global Athlete found in a 2020 study that 58% of the athletes they surveyed don't feel financially stable. The majority of athletes polled also believe they don't "receive the appropriate amount of financial compensation" from the International Paralympic Committee, the International Olympic Committee, as well as their country's government, national federation, and National Olympic Committee.
Lauryn Williams, a three-time Olympic medalist and financial planner, says this reality is pretty common: "One of the biggest misconceptions that the public has about Olympic athletes is that their fame is related to their fortune." Instead, she says, the reality is athletes often work multiple jobs to be able to participate.
When she was competing in the Summer Olympics as a track athlete and in the Winter Olympics as a bobsledder, Williams says she didn't really have someone to ask money questions like, "Should I rent or should I buy? How do I save up for taxes if it isn't being taken out of my income?" She had a financial advisor but their expertise was in investing, not financial literacy.
Video by Courtney Stith
Here's what Williams wishes she had known about money when competing and her top three pieces of advice for the next generation of athletes.
The first thing Williams says an athlete should get is an emergency fund. If you get injured and your season is over, your ability to earn has been put on hold, Williams says. Building an emergency fund is a great way to set yourself up for a better financial future: "That emergency fund is going to help you be able to get healthy and get back on the right track," she adds.
Aim to cover 3 to 6 months' worth of expenses, Jorge Padilla, a certified financial planner and senior client advisor at The Lubitz Financial Group in Miami, previously told Grow: "Be disciplined about [putting] 10% to 25% of your income towards a savings account."
As a 20-year-old, Williams didn't have a clear budget, and looking back, she wishes she'd made one.
Olympic athletes can make money in many different ways through side hustles, stipends from national governing bodies like the U.S. Olympic & Paralympic Committee, and sponsorship deals. While she had "more money coming in than going out," there were several expenses, like paying for training facilities, a coach, and an agent, that she didn't anticipate.
Williams previously told Grow that larger earnings gave her a false sense of security: "I didn't have a concrete savings goal or understanding of what was coming in or going out."
"There's a lot of different expenses related to participating in an Olympic sport because you're running a business, and you have to really understand that aspect of it and budget based on what's left over," said Williams.
Video by Stephen Parkhurst
Williams says it's crucial for athletes to understand their current finances so they can make a plan for life after competing. Athletes often don't realize that a great earning opportunity "is likely not going to last more than 3 to 5 years," she says.
Athletic careers don't last forever, she warns, and it's best to make a plan now for your future self: "If you're earning $200,000-$300,000, which is the exception not the rule with Olympic athletes, the chances are that you're not going to get a job earning that amount later on in life."
Most athletes will have to budget for taxes and save for retirement on their own because they're independent contractors. Williams says to look into Roth IRAs and contribute as much as you can. For the higher earning athletes, she suggests considering SEP IRAs and solo 401(k)s.
"If you get started now," she says, "you're going to be really happy with the way that money is going to work on your behalf for the future."
This story has been updated to reflect how many Olympic medals Lauryn Williams has won.
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