What Can a Baseball Player’s Contract Teach Us About Retirement?

After the 1999 season, the New York Mets faced a dilemma with outfielder Bobby Bonilla. For much of the 1990s, Bonilla was one of the best players in baseball. In fact, he starred for the Mets in the early part of the decade before being traded to the Baltimore Orioles in 1995.

After the 1998 season, the Mets reacquired Bonilla in the hopes that he would jumpstart their offense. Unfortunately, his 1999 season was a disappointment and he had multiple clashes with the team’s manager. Following the 1999 season, the Mets decided to release Bonilla.

There was only one problem – they still owed him more than $5 million dollars for the 2000 season. They needed to free up cash and they didn’t want to pay that amount of money to a player who wasn’t on their roster, so they approached Bonilla’s agent, Dennis Gilbert, with an unconventional offer.

The Mets wanted to defer the final year of Bonilla’s contract. Instead of paying him $5.9 million in 2000, they would pay him $1.193 million annually from 2011 through 2035. The payments are made every year on July 1, a date that has jokingly earned the title of “Bobby Bonilla Day” in the baseball community. In total, Bonilla will receive more than $29 million dollars from the annual payments.1

Bonilla is 55 years old today and still has 14 years of payments remaining. He has guaranteed* income and financial stability until he’s nearly 70 years old. Sounds like a good deal, right?

The good news is you don’t have to be a famous athlete to get guaranteed*, stable income in retirement. There are tools you can use to give yourself your own deferred retirement income. For example, an annuity can help you create a guaranteed* retirement income stream that can last for the rest of your life, even if you’re not an all-star outfielder.

How to Create Your Own Deferred Income Stream

When Bobby Bonilla agreed to the deferred contract, he essentially traded $5.9 million in current income for a stream of future income payments. You can do the same thing with an annuity.

One way to do that is with a fixed indexed annuity that has a guaranteed* income rider. With a fixed indexed annuity (FIA), you contribute a lump sum premium amount. The assets can then earn interest based on the performance of an index, like the S&P 500. If the index performs well over a certain period, you capture a portion of the gains, an amount or percentage set by the contract you chose. If the index performs poorly, your premium amount is protected from loss.

A guaranteed* income rider helps you create a deferred stream of retirement income. The terms vary by annuity, but generally, an income rider allows you to withdraw a certain percentage of the contract each year. As long as your annual withdrawal is within the allowed amount, the income is guaranteed* for life, no matter how long you live or how your contract performs.

You can contribute assets to an annuity today and let it accumulate on a tax-deferred basis until retirement. Then, when you’re ready, you can turn on the income and start receiving guaranteed* annual payments. You can even receive the income on a monthly basis if you wish.

Want to create your own deferred retirement income? Let’s talk about it. Contact us today at Protecting Your Retirement LLC. We can help you analyze your needs and develop a strategy. Let’s connect soon and start the conversation. Our telephone number is 913-648-2700.


*Guarantees, including optional benefits, are backed by the claims-paying ability of the issuer, and may contain limitations, including surrender charges, which may affect policy values.

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18910 – 2019/5/24