I remember my first big league spring training. The veteran leadership had let us know the Major League Baseball Players Association was coming in the next day for our spring meeting.
A naive 18-year-old, I had no idea what that meant or what we would be talking about. That meeting opened my eyes to the sacrifices former players had made to pave the way for current players.
Everyone sees the ever-increasing salaries but what many don't see is the greatest pension allowed under US law. That's right the MLB pension provides the highest benefits an employer can provide.
In this blog, I am going to break down everything major league baseball players need to know about the MLB pension.
MLB Pension Plan
The MLB pension plan dates back to 1947 and is currently the longest-running pension plan in all of professional sports. The plan is one of several benefits MLB players and coaches receive as part of the CBA (Collective Bargaining Agreement) negotiated with MLB owners.
The plan has roughly 10,000 participants that can be broken down into three groups ~ active players, retired players, and players receiving benefits.
One of the biggest challenges for Major League Baseball players is navigating significant early career earnings with decades as a former player. The MLB pension which can be taken as early as age 45 helps to bridge the gap for players.
Retirement planning for professional athletes requires both planning expertise and niche knowledge to understand all the options athletes have.
Here is everything you need to know about the MLB pension.
Qualifying for the MLB Pension
To qualify for the MLB pension, we must first understand service time. MLB service time is accrued for players that are on the active 26-man roster plus players on the MLB injured list.
Players on the 40-man roster but not on the active roster do not accrue service time.
To qualify for the MLB pension a player must have at least 43 days of MLB service time. 43 days of MLB service time equals one-quarter of one full year of service time. One full year of MLB service time is equal to 172 days.
Once a player reaches 43 days of MLB service they become eligible to start collecting future pension benefits.
With each additional quarter of MLB service time, a player continues to accrue pension benefits.
At 40 quarters or 10 years of service time, a player maxes out MLB pension benefits.
MLB Pension Benefits
While most pensions are going away, the MLB pension continues to rise with the cost of living increases.
The MLBPA is projected the yearly pension will rise by ~ 1.8% yearly.
Example: A player earning $100,000 in yearly pension benefits can expect to earn $101,800 next year.
Players can access the MLB pension at age 45 but at a reduced rate. To receive full pension benefits a player must delay taking it until age 62.
In 2024, the current pension benefits (at age 62) are as follows:
43 days of MLB service time = $6,875 pear
1 year of MLB service = $27,500 per year
5 years of MLB service = $137,5000 per year
10 years of MLB service = $275,000 per year
At Moment Private Wealth, we provide MLB players calculations on when would be most optimal for them to take their pension benefits.
MLB Pension Considerations
One of the biggest challenges professional athletes face is the length of "retirement". With that average professional athlete retiring before 30 years old, this leaves decades to live off of your career earnings.
The MLB pension can help players fill the retirement gap. Understanding pension and league benefits is a critical piece of mapping retirement for professional baseball players.
As you begin planning for what a future pension looks like you need to understand two main factors:
Cost of living adjustment - The MLB pension has a COLA increase each year that currently stands at 1.8% per year. This means that your monthly pension amount will increase each year at a rate of 1.8%.
Early access adjustments - The MLB pension allows player access as early as age 45 but not without consequences. A full pension, 10 years of MLB service at age 62, is worth $275,000 per year. That same pension accessed at age 45 is $86,636 per year.
Whether you accrue 43 days of MLB service time or more than a decade, the MLB pension should be a part of your retirement planning as a Major League Baseball player.
You need to understand all the factors and how they affect your overall plan.
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While MLB players have countless public benefits, players need to understand the private benefits.
Time and time again, we see athletes unaware of the benefits they have including the MLB pension.
I can't stress this enough but you don't want to be working with a financial team learning on your situation.
You want to be working with a specialist in athlete wealth management.
Done correctly these benefits can provide you millions of dollars in lifetime benefits.
If you are a Major League baseball player looking to better understand the MLB pension, schedule a call, and talk with a Moment founder.
Not sure what questions to ask, check out this video on 10 questions you should ask when interviewing a financial advisor.
Get in Touch With An Advisor
Frequently Asked Questions
Here are some answers to questions I received frequently about this topic.
How much is the MLB pension? Players receive pension benefits starting at 43 days of MLB service and maxing out at 10 years of MLB service time. In 2024, the MLB pension maxes out at $275,000 per year.
When can players access MLB pension benefits? Players can start accessing MLB pension benefits as early as age 45 with full pension payouts happening at age 62.
How does Moment Private Wealth help professional baseball players? We are specialists in working with professional athletes. We help professional baseball players with income planning, tax planning, risk management, estate planning, and investment management. We also help MLB players navigate the MLBPA benefits plan package including the MLB pension.
Does Moment Private Wealth help professional baseball with retirement planning? Yes, outside of navigating MLB pension benefits, Moment Private Wealth helps professional baseball players with tax planning, retirement planning, and optimizing their entire financial life both during and after their playing career.
Where can I find out more information about my specific pension benefits? Major League Baseball players can contact the MLBPA for more detailed answers to the MLBPA benefits plan package.
*Moment Private Wealth offers information on tax and estate planning that is general in nature. Tax and Legal advice are not provided by Moment Private Wealth. Consult an attorney or tax professional regarding your specific legal or tax situation.
