Hockey Finance in Canada

Professional hockey players make a lot. But do they make enough to live off their earnings for life?

Math class is in session. Today we take a fictional player and see how it all adds up.

Our story centres around the fictional goaltender Billy Baton. Billy first made a name for himself in the minors when he quite literally stood on his head making a save that went viral across TikTok. Because of his dominance between the pipes and his diligent financial practices he was dubbed “Billy the Saver”.

Billy religiously saved 10% of his income, saying vocally to fans and teammates alike,

“I do two things well, stop pucks and save money”.

He never went on to win the Stanley Cup, but Billy’s career would bring him great riches.

Over his 5-year NHL career Billy earned on average $1.2M each year. He was taxed at a rate of 50% leaving him with $600,000.00 net annual earnings. As a dedicated saver, he paid himself first, saving 10% of his pay check. By the end of his career, he had saved a total of $300,000.00. Now that sounds like a lot of money! However, how long does it last?

Billy was 24 years old when he retired from the NHL. Based on our calculations he would be able to withdraw $1,315.93 per month for 60 years.

In other words, his savings would pay him the equivalent of a full-time job at $8.25/hour.

Could Billy live off this? Well, we’d have to ask Billy. Every person has different needs and desires and therefore requires more or less monthly income. However, it would be safe to assume that $1,315.93/month, which falls below the minimum wage in most Provinces, would not be enough for Billy.

NHL players are in the interesting position of acquiring great wealth very early on. Despite this it is in Billy’s best interest to continue working and saving, instead of retiring at 24 years old.

In an alternative scenario, Billy has $300,000.00 worth of saving. He first withdraws $100,000.00 to buy a sick car and reinvests the remaining $200,000.00. He gets a job as Zamboni driver to pay his day-to-day bills. His investments are left alone for 31 years until he turns 55 years old. At an average rate of return of 5%, his $200,000.00 would slowly but surely turn into $939,264.52. Now that’s a retirement plan.

We would recommend scenario two, where Billy continues working and saving.

Financial advisors are able to take your monthly income, expenses, and savings and use these figures to calculate exactly what you need to live off during retirement. Essentially, we determine what you have now, what you want later, and what you need to save in order to achieve those goals.

I hope you enjoyed this story and understood the life lesson. Saving for the long term is more often than not the recommended approach. Again, this was a fictional scenario with ball park numbers. This is intended for educational purposes to illustrate how these calculations are made. This should not be read as personal financial advice.

This week kicks off the 2022 Stanley Cup Finals. When the puck drops at 7pm EST the Nation is watching. And you can bet, Billy is too. He is sitting around the TV with his family in a home that is bought and paid for from his strategic investing. The only thing that Billy stresses about these days is if the Maple Leafs will ever make it out of the first round.

Happy Playoffs everyone! Just like a great goalie, start saving and start winning.