Tiger has all the luck.
If you are lucky, you have an employer who offers some percentage of matching contribution for your individual retirement account. If you are really lucky, you have a guaranteed pension plan.
If you are Tiger Woods, or any PGA Tour pro, you redefine what others consider lucky.
Woods, the world’s greatest golfer has the world’s greatest employer funded retirement package. How great?
If Woods keeps winning at his current rate, enjoys a nine percent annual return and captures just seven FedEx Cups in his career, he could reach $1 billion in retirement payouts courtesy of the PGA Tour Inc.
Yes, a billion. As in a thousand million. As in $1,000,000,000.
As in, if the PGA right this moment started handing Tiger a dollar bill every second of every minute of every day, it wouldn’t reach a billion until 2039.
Even without this retirement plan, Woods is well on his way to becoming the first American billionaire athlete. He might accumulate several billion. In 2006 Forbes reported he cleared $100 million in on- and off-course revenue.
But even if he found a way to spend every last penny of that fortune and his own personal retirement savings, he might have $1 billion coming to him after he turned 60 thanks solely to the contributions of the PGA. Golfers are independent contractors and not employees of the PGA. But the governing body, in lieu of a traditional pension, offers contributions based on a number of performance variables to a retirement fund that each player controls.
Since turning pro at 21, Woods has been collecting the contributions and watching them grow. Back in 2001, Golf Week estimated he might one day retire with $300 million. But with the new FedEx Cup funded deferred compensation plan, what was an astounding figure might now be the richest retirement payout ever.
All the 31-year-old has to do is keep winning, most notably the annual FedEx Cup, which in a combination of season-long success and a four-event “playoff” pays the winner a $10 million contribution to his tax-free retirement account.
Woods can’t touch the money until he’s 45 and would be a fool to do it before the plan forces him to at 60. If it generated a nine percent annual return (the assumption for all calculations in this article) for 29 years, the magic of compounding interest will turn the original $10 million into a cool $123.1 million.
With investing, the caveat is always that past performance does not guarantee future results. But when it comes to Tiger Woods and golf, there is less fear his dominance will subside. Woods will win. For the foreseeable future, he could win the FedEx Cup any year he commits to doing it.
Which means he could make the $1 billion retirement account projection look Newt Gingrich conservative.
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