So how does Tiger end up with a billion?
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
First off, based on the old plans, Woods already had an estimated $300 million in post 60-year-old payouts coming to him according to Golf Week. However, those plans have changed and now will generate less money.
On the other hand Golf Week was estimating using an eight percent annual return. Three separate financial planners we spoke with said nine percent was more than reasonable for Woods since even though the PGA funds the account, he controls it. That means he'd have constant, high-level attention paid to making it perform. He'd likely do better than even the Standard and Poor's average of 11.3 percent.
In the end, our planners, under orders to remain conservative, stuck with nine percent and believe that the original Golf Week estimate should hold up at about $300 million.
The new plan is where the big money is, however. The FedEx Cup has confused fans and players alike. But competitively everyone agrees that since the ***le is based on mostly consistent, year-long dominance, for the foreseeable future, Woods should win it anytime he wants. He barely wants to this year and he's the heavy favorite anyway.
So let's say Woods were to play at a dominating level for the next, say, decade. He will probably go far longer, since top players routinely compete into their mid-40s and Woods is (and likely will be) in the kind of phenomenal physical condition that should defy the aging process.
But for arguments sake, we'll have him drop off around then. Let's even argue that he doesn't finish in the top 70 in any year he doesn't win (although a second place in, say, 2009 is eventually worth $31.1 million to him). In reality, Woods will be high in the money, if not the winner, for a long time to come.
So how many can he win?
"I think seven is very reasonable," Ogilvy said. Fine, seven it is. We'll fan it out over the next 11 Cups, which means an estimated approximate retirement worth of:
2007: $123.1 million
2008: $112.9 million
2010: $95 million
2011: $87.2 million
2013: $73.1 million
2015: $61.5 million
2017: $51.8 million
That totals up to $604.6 million when he is 60.
At this point, according to PGA Tour spokesman Bob Cook, Woods would have to start making withdrawals that would empty the account in five years. The payments are made monthly based on a yearly recalculated number. The decreasing money, however, will continue to accrue interest during the 60 months and will earn an estimated additional $114.7 million, according to Morgan Stanley's Yellen.
That gives Woods $718.7 million in FedEx Cup money alone. Add on the $300 million in payouts from the other, original pension plans and you have $1,018,700,000. And this is a number Woods can easily shatter in any number of ways – more victories, longer career, better investment performance.
So there's your $1 billion. All from an account Woods never had to contribute a cent too. Woods was unavailable for comment Tuesday, but he's long maintained he pays little attention to his PGA retirement.
Of course, if the billion doesn't hold him over, he always has Social Security, which for someone Woods' age will kick in at 67 in 2042. How much will that be worth?
"Probably about $2,066 a month," Yellen said.
So he's got that going for him. Which is nice.[/b]