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All eyes will be on Team USA as they compete in the Milan-Cortina Games, but win or lose, all US Olympians and Paralympians will go home with a prize.
Billionaire Ross Stevens pledged $200,000 to every US Olympian to help them gain some financial security after their careers.
More complicated than a $200,000 check
The payment is more complicated than the $200,000 check that will arrive when Team USA returns from Milan.
Athletes get the first $100,000 at age 45 or 20 years after their first qualifying Olympic appearance, whichever is later. Another $100,000 will be given as a guaranteed benefit to their families after they die. Athletes are eligible for the award for each Olympic Games they compete in, and the awards are funded until 2032 Olympics in Brisbane, Australia.
An important caveat to the gift is that the $100,000 Olympians receive over their lifetime will be considered taxable income, unlike the prize money awarded to medalists. Winners are awarded $37,500 for gold, $22,500 for silver, and $15,000 for bronze, and these winnings are exempt from federal taxes, but do not amount to a fixed income.
Depending on where athletes live and how much they earn, a $100,000 increase in income could amount to less than $50,000 after taxes, an analysis by luck found.
The second $100,000 given after the athlete’s death may be subject to estate or gift tax depending on the residual value of their estate, Nathan Goldman, an accounting professor at North Carolina State University, said. luck.
Income tax plays a major role
While there is no data on average Olympian earnings, earnings vary depending on sponsorship and success.
Many Olympians work out regularly day jobs. Alpine skier Keely Cashman works as a barista at her family’s coffee shop in Lake Tahoe, California. Tabitha Peterson, a curler, works as a pharmacist in Minnesota. Higher earning Olympians earn millions in sponsorships each year. Forbes estimates that alpine skier Mikaela Shiffrin makes $7 million annually from her sponsorships with companies like chicken feetLand Rover, and Grubhub.
A luck The analysis found that Olympians would receive an annual post-tax income boost from $48,350 to $73,176 at current tax rates (with no 401(k) or IRA contributions, no itemized deductions, and a personal exemption).
For this analysis, we chose three Olympic training hubs as locations: Truckee, Calif., Steamboat Springs, Colo., and Miami, Fla. California has a graduated income tax rate, from 1% to $12.3%, the highest income tax rate of any state. Colorado has a flat income tax rate of 4.4%, and Florida is one of six states with no income tax.
We used today’s tax rates, including FICA, to estimate how much a $100,000 increase in income would actually affect an athlete’s after-tax take-home income, using SmartAsset’s tax calculator. We selected a range of professions and salaries to show how overpayments affect people in different states and income levels.
The Barista
A barista in the US earns an average of $15.94 per hour, or about $33,160 per year, according to Indeed. With an additional $100,000, a barista in Florida would experience a $73,176 increase in take-home income. Their take-home income rises to $68,776 in Colorado and $65,354 in California.
A former Olympian working as a barista living in Florida will pocket $4,400 more than a barista living in Colorado, and $7,822 more than one in California.
The Pharmacist
A pharmacist earns an average of $141,108, according to Indeed. With an additional $100,000, a Florida pharmacist would have a $69,766 take-home income increase. In Colorado, their take-home income rises to $65,366 and to $60,466 in California.
A former Olympian working as a pharmacist living in Florida earns $4,400 more than a pharmacist living in Colorado, and $9,300 more than one in California.
The Millionaire
A millionaire making $7 million a year in Florida would get a $60,650 take home income. Their take-home income rises to $56,250 in Colorado and just $48,350 in California.
A millionaire living in Florida earns $4,400 more than a pharmacist living in Colorado, and $12,300 more than one in California.
Build financial security
Although the Olympians didn’t get a full $100,000, the donation is a step toward long-term financial security in a career that often requires sacrifices in work and education to train for a chance to compete in the Olympics. Training has a financial burden as well, and athletes typically spend $12,000 a year to compete in their sports, according to a commission ordered by Congress to study Olympic reformers.
“I do not believe that financial uncertainty should prevent our nation’s elite athletes from breaking new boundaries of excellence,” said Stevens, the founder and CEO of Stone Ridge Holdings Group, which has donated $100 million to the United States Olympic & Paralympic Committee.
Athletes often rely on sponsorships for more stability, but they can dry up after they leave their sport, and opportunities can be limited for athletes whose sports are not big-ticket events. Even the multi-gold medalists can struggle to build career after the games.
“Even the Olympians whose names we know better, are still nowhere near a million dollars when they are in less popular sports as professionals,” said Goldman, the accounting professor. He estimates that most Olympians make between $150,000 and $200,000 in today’s money.
Some Olympians have resorted to selling their medals to make ends meet. Swimmer Ryan Lochte sold nine of his 12 Olympic medals, including three last year, reportedly sold for a combined $385,000.
“I never swam for gold medals,” Lochte wrote Instagram. “Those medals? They’re just the cherry on top of an incredible journey.” Locke said CNBC in 2019 he went from making more than $1 million a year to $75,000 from a sponsorship. Former Olympic diver Greg Louganis sold two gold and one silver medals for nearly $431,000 last year because “he needs the money.”
