What Baseball Teaches Us About Annuities and the Long Game of Money

The Same Question Always Shows Up

I’ve spent a lot of years talking with people who’ve done very well financially. Business owners, executives, professionals, and professional athletes. Different careers, different paths, but eventually the same question comes up: how do I make sure the money lasts? That question doesn’t usually show up early, when the income is strong. It shows up later, when the paychecks slow down or stop. By then, the math matters a lot more.

Professional athletes are the clearest example of this problem. They earn extraordinary sums of money, often at very young ages. Their careers are short, unpredictable, and physically demanding. Meanwhile, retirement can last 40 or 50 years. That imbalance between earning years and spending years is where things start to break down.

Why High Earners Still Run Out of Money

From the outside, it’s easy to assume athletes who run into trouble just made bad choices. Sometimes that’s true, but it misses the bigger issue. The real problem is cash flow, not character. Money arrives early and in large chunks, then disappears entirely. If there’s no plan to replace that income, the outcome is almost predictable.

When income stops abruptly, expenses don’t magically adjust. Homes, family obligations, and lifestyle costs stay in place. Investments may fluctuate or fail. Without structure, even large asset balances can erode faster than expected. Bankruptcy, when it happens, is usually the end result of a long cash-flow problem.

Baseball Has Been Solving This Quietly for Decades

Baseball has been dealing with this problem longer than most industries. Long before deferred contracts became headline news, Major League Baseball was already experimenting with income smoothing. Guaranteed contracts, deferred compensation, and long-term payment structures quietly became part of the system. These weren’t financial tricks. They were early solutions to longevity risk. 

Even Babe Ruth understood this. The most famous ballplayer in history owned an annuity. That wasn’t because he lacked confidence or spending power. It was because he understood that earning money and turning it into lasting income are two different things. Fame fades, careers end, and life keeps going.

The Annuity That Changed Baseball

One of the most important moments in baseball economics came from an annuity dispute. In the early 1970s, pitcher Jim “Catfish” Hunter had a contract requiring part of his salary to be placed into an annuity. When the team failed to fund it, Hunter challenged the contract. An arbitrator ruled in his favor, voiding the deal entirely. That decision helped accelerate the path to free agency.

This wasn’t just a labor ruling. It was a reminder that guaranteed income promises matter. A missed annuity payment reshaped an entire sport. That’s how central income security really is.

Deferred Compensation in Plain English

Fast forward a few decades and the examples become more visible. Bobby Bonilla’s deferred compensation deal with the New York Mets has taken on a life of its own. Every

July 1^st, “Bobby Bonilla Day” is talked about, shared, and even celebrated as a reminder of one of the most well-structured contracts in professional sports. Long after his playing days ended, Bonilla continues to receive a guaranteed paycheck, exactly as planned.

That arrangement looks a lot like a fixed annuity. A known amount converted into predictable future payments. It removed market timing risk entirely. Bonilla knew exactly what income would show up each year, regardless of market cycles or headlines. That’s not funny. That’s disciplined planning.

Annuity Economics at Scale

Shohei Ohtani took this concept even further. The headline number of his contract grabbed attention, but the structure mattered far more. Most of his compensation was deferred well into the future. During his playing years, his cash flow stays relatively modest. Afterward, large guaranteed payments begin.

This isn’t novelty. It’s annuity math at scale. Ohtani created long-term income security while giving his team flexibility today. The principles are the same ones we use in retirement planning. Convert peak earnings into dependable future income.

Why Athletes Still Struggle Financially

Despite all of these examples, many athletes still run out of money. Not because they didn’t earn enough. Plenty earned tens or hundreds of millions. The problem is what happened after the income stopped.

Common patterns show up again and again:

• Lifestyle inflation creates high fixed expenses

• Investments are made without proper oversight

• Financial literacy gaps go unaddressed

• Income replacement is never installed

When income disappears and structure is missing, the math turns against you quickly.

This Isn’t Just an Athlete Problem

This same pattern shows up outside of sports. Business owners who sell companies often face it. Executives who retire early face it. Income stops, but spending doesn’t adjust fast enough. Assets fluctuate, but expenses remain fixed. Longevity risk becomes very real.

The mistake is treating peak earnings as permanent. Without converting assets into income, people remain exposed to markets, spending shocks, and time itself. Planning too late turns small mistakes into big problems.

What Annuities Actually Do

Annuities exist for one simple reason. They turn assets into income. Not projections or hopeful assumptions. Actual payments that show up on schedule. They function like a personal paycheck after employment income ends.

Used properly, annuities help:

• Cover essential expenses

• Reduce reliance on market timing

• Create spending discipline

• Transfer longevity risk

They don’t replace investing. They support it.

Structure Beats Discipline Every Time

Athletes understand guaranteed income when it comes from contracts. They value certainty and predictability. The mistake is failing to recreate that same certainty in personal finances. The concept is familiar, but the application often gets ignored.

Once essential expenses are covered with guaranteed income, everything else gets easier. Investments can grow without pressure. Spending decisions become clearer. Retirement feels less fragile. Structure does the heavy lifting so discipline doesn’t have to.

If people who earned millions early in life can run out of money, anyone can. Financial security isn’t about impressive numbers on paper. It’s about whether money shows up every month, for as long as you’re here. In retirement, that’s the only stat that matters.