Earning a large sum of money and keeping it turn out to be almost entirely unrelated skills. The clearest evidence for this comes from the people who’ve earned the most money the fastest — professional athletes and lottery winners — and the data on how often they end up broke despite receiving more money in months than most people see in a lifetime.
- A widely repeated claim that 78% of NFL players go broke within two years of retirement has been directly contradicted by peer-reviewed research — the real 12-year bankruptcy rate is closer to 16%, still notable but far lower than the myth.
- A rigorous study of Florida lottery winners found that receiving $50,000 to $150,000 didn’t prevent bankruptcy — it only delayed it, with no difference in eventual debt levels compared to people who won under $10,000.
- Both cases point to the same mechanism: a sudden income spike doesn’t come bundled with the habits, systems, or self-control needed to preserve it.
- Earning is a skill measured in income; keeping is a skill measured in net worth — and almost nothing about being good at the first guarantees anything about the second.
The Myth That Needed Correcting
A 2009 Sports Illustrated claim that 78% of former NFL players are bankrupt or under financial stress within two years of retirement has circulated for over a decade, often used as a cautionary tale about high earners and money. It turns out to be false. A National Bureau of Economic Research working paper by Kyle Carlson, Joshua Kim, Annamaria Lusardi, and Colin Camerer, tracking NFL players drafted between 1996 and 2003 alongside actual bankruptcy court records, found that only about 1.9% had filed for bankruptcy within two years of retirement — nowhere near 78%. The real, more sobering finding was different: the bankruptcy rate climbs steadily afterward, reaching nearly 16% within 12 years of retirement, and critically, career length and total earnings made almost no difference to that outcome.
That correction matters for reasons beyond accuracy. The debunked myth suggests an isolated, extreme problem specific to athletes; the real finding — that even a well-paid, decade-long career provides “little protection against the risk of going bankrupt,” in the researchers’ own words — suggests something closer to a general pattern about income and preservation that applies well beyond professional sports.
The Lottery Evidence Points the Same Direction
A separate, peer-reviewed study published in the Review of Economics and Statistics examined Florida lottery winners between 1993 and 2002, comparing people who won $50,000 to $150,000 against people who won less than $10,000. The large winners were initially less likely to file for bankruptcy right after their win — as expected, since the cash could cover existing debts. But three to five years later, that protection had disappeared entirely: the large winners filed for bankruptcy at rates indistinguishable from the small winners, and when they did file, their net assets and unsecured debt looked essentially identical to the small winners’ as well.
The researchers’ interpretation is worth sitting with: the median large winner could have paid off all his unsecured debt or built real equity with the windfall. He did neither. The money didn’t disappear because it wasn’t enough — it disappeared because nothing about receiving it changed the underlying spending and saving behavior that determines whether money accumulates or evaporates.
Why Earning and Keeping Are Actually Different Skills
Earning money rewards a specific, visible skill set: performance, talent, timing, negotiation, or in the lottery’s case, pure chance. None of that skill set has any necessary connection to the behaviors that determine what happens to money once it arrives — delaying gratification, tracking a saving rate, resisting a rising cost of living, or simply not spending faster than income allows. A world-class athlete can be genuinely excellent at earning and have no practice at all in keeping, because for most of a career, earning was the only skill actually being tested.
This is the same distinction covered from a different angle in Why Income Doubled and Savings Didn’t Move — income growth and wealth accumulation are correlated in theory but frequently decoupled in practice, because the mechanism that would connect them (a rising saving rate) isn’t automatic. It has to be deliberately built.
What the “Keeping” Skill Actually Looks Like
- A saving rate that’s fixed and automated, rather than whatever happens to be left over after spending — the mechanism covered directly in How to Build an Emergency Fund in 6 Steps, which works precisely because it removes the need to actively decide to preserve money each month.
- Fixed costs that don’t expand automatically with income — the lifestyle creep pattern explored in Lifestyle Creep: Why Earning More Never Makes You Richer, which is exactly the trap that turns a large, temporary income spike into a permanently elevated cost structure that outlives the income itself.
- A visible distinction between income and net worth — someone can be earning a career-high income and simultaneously getting poorer in net worth terms if spending, debt service, and lifestyle costs are all rising faster than the income itself.
- A structural buffer against the specific moment income stops or drops — for an athlete or lottery winner this is retirement or the end of the windfall; for anyone else it’s a layoff, an illness, or a career change. See The Cash Flow Trap: Why Six-Figure Earners Still Go Broke.
None of these are earning skills. They’re closer to systems and defaults — which is exactly why they can be built by someone with an average income just as effectively as by someone with an exceptional one, and why an exceptional income provides no automatic protection without them.
Why the Gap Persists Even When the Warning Is Well Known
Athletes and lottery winners aren’t naive about the risk — the NFL has run a financial wellness program for years, and lottery agencies routinely connect large winners with financial advisors. The pattern persists anyway, which suggests the problem isn’t primarily a lack of information. It’s closer to what shows up in research on childhood-formed beliefs about money — a lifetime of one relationship with money (scarcity, then sudden abundance) doesn’t automatically produce the habits suited to the new reality, no matter how much advice is available. See Money Scripts: How Childhood Silently Controls the Way You Handle Money.
There’s also a visibility problem specific to sudden wealth: a new income level invites new social expectations, new spending opportunities, and new people asking for help or investment — pressures that a gradually built income rarely produces at the same intensity. This is part of why Stealth Wealth: Why Rich People Look Ordinary tends to correlate with actually keeping money rather than losing it — reduced visibility reduces the specific social pressure that erodes a windfall.
This article is for general educational purposes and summarizes published academic research. It is not personalized financial advice. Individual circumstances vary significantly — consult a qualified financial advisor for guidance specific to sudden income changes or windfalls.
FAQs
Does this mean high earners are worse at managing money than average earners?
Not necessarily worse — the research doesn’t show that. What it shows is that a large or sudden income doesn’t automatically come with better money-management skills, so the same behavioral gaps that affect any income level can affect high earners too, sometimes with larger dollar consequences.
Would receiving financial education have changed the outcomes in these studies?
The lottery study specifically found that even winners with the resources to pay off all debt or build equity chose not to, suggesting the gap isn’t purely informational. Structural defaults — automatic saving, fixed spending caps — tend to outperform advice-based interventions in the broader behavioral research on this topic.
Next step: for the specific mechanics of turning a fixed saving rate into an actual system rather than good intentions, see Good Debt vs. Bad Debt: Building vs. Burying — since how new money interacts with existing debt is often where a windfall or raise first gets absorbed.
About the Author
Shurah writes and maintains DataPips independently, drawing on hands-on experience in trading and entrepreneurship. Articles are shaped by personal research, real trading lessons, and the process of building this publication from scratch — not by a formal financial credential.
