Don’t Get Mad, Get a Gameplan

Welcome to March Madness, the national college basketball tournament mania.

This month, March Madness features 68 men’s and women’s basketball teams from the Division I level of the National Collegiate Athletic Association (NCAA) in single-elimination tournaments to determine the national championship teams.

Interestingly, March Madness basketball has generated some words of wisdom that can help guide your retirement.

Before we jump there, let’s first take a trip back in time. March Madness was first used to refer to playoff basketball by an Illinois high school official in 1939.

But the term did not become synonymous with the NCAA basketball championship until CBS broadcaster Brent Musburger used it during coverage of the 1982 tournament, the same year the first Division 1 NCAA women’s basketball championship tournament began.

And now those words to the wise for retirement planning.

A March Madness regular, Indiana University coach Bobby Knight won titles in 1976, 1981, and 1987. As a player with The Ohio State University, he was a member of the 1960 NCAA championship team.

Knight once said: “The key is not the will to win. Everybody has that. It is the will to prepare to win that is important.”

Knight’s quote reminds me of the importance of preparing to win when it comes to retirement investing.

How do you create a retirement income plan that will protect you from future risk?

The answer is you take stock market luck out of the equation. You do that with diversification.

Another quote that impressed me is from the GOAT (greatest of all time) of college men’s basketball, John Wooden. Coach Wooden ended his 27-year UCLA coaching career by winning his tenth national championship in 12 years.

Wooden famously said, “If you don’t have time to do it right, when will you have time to do it over?”

Now, that reminds me of financial planning, too. To do it right, go for safe layups, a little riskier jump shots, and the highly risky three-point shots.

For your winning financial game plan, I recommend you try to score three different ways. For instance, you might consider buying a T-bill for safety or a fixed annuity for income, and then you let the rest of the money grow to offset what you are withdrawing.

The lay up, slam-dunk basket holds money for emergencies. This might include Treasury Bills and certificates of deposit (CDs). This is guaranteed money, and the funds can be accessed relatively quickly. Cash savings can tide you over during a medical emergency or natural disaster until other funds start rolling in.

The somewhat riskier jump shot basket contains fixed annuities. These insurance instruments can grow faster than inflation over time. Each year, the previous gains can be locked in to prevent a loss of principal.

The highly risky three-point shots are likened to the stock market. This is more risk and more reward. If you have money in the stock market, it should be allowed to compound. And the number one rule of compounding is it must be left undisturbed.

Many investors are tempted to ignore the slam dunk shots, and that can be a huge planning mistake. What gets many retirees into trouble is that they try to get more yearly income, and they wind up getting less because they are taking on too much risk. (Sadly, that happened to my father when I was growing up.)

A final quote comes from the ultimate GOAT, the college basketball coach with the most March Madness titles.

Since 1985, Geno Auriemma, the head coach of the University of Connecticut Huskies women’s basketball team, has led UConn to 17 undefeated conference seasons and 11 March Madness national championships, the most in college basketball history.

Auriemma said, “Your philosophy in basketball will get you to a certain point. After that, you need individuals to take you to the next step.”

My advice is to get solid financial planning individuals on your team to customize your retirement plans.

These individuals must help you customize your game plan. That’s why we do not offer cookie-cutter, off-the-shelf, one-size-fits-all retirement plans.

When I started my financial planning business, I implemented a “no agenda” philosophy.

First, we understand who you are and what your vision for retirement is. The second part of our coaching is education, so you see where you stand today. Our third step is to see if there’s anything we can do to improve what you’ve already accomplished.

That’s how we coach to win the retirement game, one family at a time.