Retirement Planning for College Athletes With NIL Income: What You Need to Know
Introduction: More Than Just NIL Deals
Name, Image, and Likeness (NIL) has given college athletes unprecedented opportunities to earn money during their playing years. But while cashing checks is great, keeping those checks — and growing them — is what separates short-term gain from long-term wealth.
One of the smartest, most overlooked moves you can make as a college athlete with NIL income? Opening a retirement account.
Yes — even at 19, 20, or 21 years old.
Let’s break it down in athlete-friendly terms:
If NIL is your game check, retirement planning is your off-season training — quiet, disciplined, and eventually unstoppable.
Part 1: Why Retirement Accounts Matter Now
You may think:
“I’m not retiring anytime soon — why save for 40 years from now?”
Here’s why:
Time is your biggest asset — compound interest favors the young.
NIL income counts as self-employment income — which qualifies you for special retirement accounts.
You can reduce your tax bill — and keep more of what you earn.
You can either pay the IRS now, or outsmart them legally with smart saving.
Part 2: The Retirement Account Options for NIL Earners
1. Roth IRA (Individual Retirement Account)
Best for: Athletes in a low tax bracket now who want tax-free money later
Contribution limit: $7,000 in 2024 (if under age 50)
Tax treatment:
Contributions = after-tax
Growth = tax-free
Withdrawals in retirement = 100% tax-free
Translation for athletes:
Pay taxes now while you’re in a low bracket, and take the money out later tax-free, even if you become a millionaire.
Bonus move: You can withdraw contributions (but not gains) without penalty, making it flexible.
2. Traditional IRA
Best for: Athletes who want a tax break this year
Contribution limit: $7,000 in 2024
Tax treatment:
Contributions = tax-deductible
Growth = tax-deferred
Withdrawals = taxable
Translation:
You lower your taxable NIL income now, but you’ll owe taxes later when you take it out.
Think of it like deferring taxes to your “retirement season.”
3. Solo 401(k)
Best for: Athletes with significant NIL earnings and no employees
Contribution limit (2024):
Up to $23,000 as employee
Up to 25% of profits as employer
Total: up to $69,000
Tax treatment:
Contributions = tax-deductible
Growth = tax-deferred
Option to add Roth component (pay taxes now, grow tax-free)
Translation:
This is the big boy/girl plan. You can contribute more, lower taxes now, and potentially do a Roth Solo 401(k) for long-term power plays.
4. SEP IRA (Simplified Employee Pension)
Best for: Simpler setup than Solo 401(k) for high-earning NIL athletes
Contribution limit: Up to 25% of net income, max $69,000 in 2024
Tax treatment:
Contributions = tax-deductible
Withdrawals = taxable
Translation:
Easier to manage than a Solo 401(k), and great for athletes making big NIL money without needing complex paperwork.
Part 3: Taxes — What This Looks Like in Real Life
🧮 Athlete Example: You Earn $50,000 in NIL Deals This Year
Let’s say you’re a junior quarterback and you land $50,000 in NIL money. Here’s how different accounts affect your taxes:
| Option | Contribution | Taxable Income | Immediate Tax Savings |
|---|---|---|---|
| No account | $0 | $50,000 | $0 |
| Traditional IRA | $6,500 | $43,500 | ~$1,300 saved (at 20% bracket) |
| Roth IRA | $6,500 | $50,000 | $0 now, tax-free later |
| Solo 401(k) | $20,000 | $30,000 | ~$4,000 saved now |
| SEP IRA | $12,500 | $37,500 | ~$2,500 saved now |
💡 Note: These numbers are simplified and rounded for education purposes. Actual savings depend on tax bracket, deductions, and filing status.
Part 4: What Financial Literacy Really Means Here
This isn’t just about saving for retirement — it’s about understanding how money works when it’s taxed, earned, and invested.
Here’s what you’re really learning:
Opportunity cost: $1 spent on a luxury now is $10 missed later
Compound growth: Investing early means your money works harder than you do
Tax efficiency: Choosing the right account helps you legally pay less to Uncle Sam
Part 5: Which Account Should You Choose?
| Situation | Best Account |
|---|---|
| You’re new to money and don’t want tax stress | Roth IRA |
| You want a tax break this year | Traditional IRA |
| You made $100K+ in NIL deals | Solo 401(k) or SEP IRA |
| You want flexibility and no early withdrawal risk | Roth IRA |
| You want to play like a pro in wealth building | Solo 401(k) + Roth component |
Final Whistle: Your NIL Money Is Business Money
As a college athlete with NIL income, you’re no longer just a player — you’re a brand, a business, and a future CEO of your own finances.
Starting a retirement account now is like getting reps in the weight room. It doesn’t always feel flashy, but the long-term payoff is unmatched.
Coach’s Advice (a.k.a. Financial Literacy Tip):
“The earlier you understand how taxes and time work together, the faster you escape the paycheck-to-paycheck trap that catches too many people.”