Olympic dreams lead some parents to shortchange retirement savings

Fueled by dreams of Olympic medals and college scholarships, many parents of top young athletes invest in their kids' activities to the detriment of their own retirement savings, according to a new study.

The poll, commissioned by TD Ameritrade, focused on 1,001 parents of elite athletes.

While families typically dole out up to $500 a month on each child’s athletics, 33% of the parents polled said they do not regularly set aside money for their retirement. And 57% said they have no long-term financial plan.

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"It’s natural that parents are going to want to support their children’s athletic dreams," says Carrie Braxdale, managing director of investor services for TD Ameritrade. "But it’s also important that they not sideline their own financial goals."

College savings also get sidelined, in part because many parents think they won’t need them. Among those polled, 67% hoped their child would nab an athletic scholarship — but only 24% later did. Meanwhile, 34% believed their child would make it to the Olympics, when in reality, only 2% did. "So there’s a pretty big disconnect between the optimism and hopefulness vs. the reality,"’ Braxdale says.

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Seventeen-year-old track star Damion Thomas Jr. is headed to the Rio Olympics as an observer. The USOC has pegged the hurdler as a contender for the 2020 Games, and he's being courted by some of the top schools in the U.S. His family spends thousands per year toward his competitions.

"If our kids are better off in the future, then all our sacrifices have paid off," dad Damion Thomas Sr. said in an email.  Still, Thomas has some concerns about his own future. He and his wife have a retirement plan, "but it can be better."

Robert Stammers, director of investor education at CFA Institute, a global organization of investment professionals, says he has seen clients shortchange necessary savings goals to fund a hobby or passion. He advises parents who want to fund their children's athletic dreams to figure out where else they can cut back so as not to neglect their own financial goals.

"You have to put the money away for retirement or whatever your financial goal is, and then put away money for the passion,'' he says. "Then you have to learn to live on whatever is left over."

Braxdale encourages families to approach financial planning the way they do their children’s sports, "setting goals, having a plan around how to get there, and leveraging coaches and tools to help you really derive the best outcomes."

You could start by plugging goals and numbers into a mobile financial planning tool while attending your child's practice. "Parents are spending 10 to 12 hours a week at these events," Braxdale says. "Maybe you could leverage a little of that practice time to invest in yourself."