As many Americans have been doing, I was watching some exciting NCAA basketball recently. While I was watching the game, I noticed some interesting similarities between the basketball game and retirement planning. You may be wondering, how could two activities so different have any similarities? Well, let me explain through the four ideas I have listed below:
1. Time is precious. As I watched the basketball game, I began to see just how valuable time is to success in the game. Once the teams realized that they were running short on time, their strategy changed. The team in the lead became more concerned with defending their lead and the one who was behind became more aggressive in their attempts to score. The value of time in a basketball game is very similar to value of time in retirement planning. Those who have been saving for quite some time are usually concerned with preserving their savings once they are nearing retirement. Whereas, those who have not been saving for long time will be more likely to aggressively save when nearing retirement just like the team that was behind in the game. If you have a lot of time before you retire, save now so you don’t have to aggressively save later.
2. Don’t give up the freebies. One of my biggest pet peeves about my favorite college team is when they can’t make free throws. Those are free points that the other team is giving you and you should capitalize on those free opportunities. Well, the same is true about some opportunities you may have available to you for retirement savings. If your employer offers a match program for a deferred compensation program, you should utilize it. If you don’t, you are throwing away a free opportunity to get some additional savings. All your employer wants is for you to save a little money and because of your savings efforts they will reward you by matching at least a portion of what you have saved. So just like free throws, a match program is ‘free money.’ All you have to do is save.
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3. A good coach is important to success. Ever wonder why coaches like Mike Izzo and Rick Pitino have been around for what seems like forever and others move on quickly? The long tenured coaches stick around because of their success. A good coach has the ability to make their student athletes perform at the highest levels possible while showing the athletes how to be successful in the world. So, a coach is very important to the program and the student. The same is true for you if you hire a financial advisor (coach). When hiring a financial advisor, use caution and trust yourself. When you are looking for a financial advisor, here are some things to think about: how does he or she get paid (hourly, commission, etc.), how did you hear about them, what do their certifications (if any) mean, and do they really have your best interests in mind or are they just trying to sell you something? Do your research on the advisor and / or financial products and trust your instincts. If you don’t feel comfortable with a product or advisor, don’t buy the product or hire the advisor. It’s as simple as that.
4. It’s OK to foul every once in a while. As I was watching the game, one of my friends said ‘that was a good foul.’ Many of you may have heard this term before and refers to when a foul prevented some points being scored. Sometimes in retirement planning it is acceptable to foul as well. At times you have to break your current savings plan to accommodate change in your lifestyle. For example, a new child (or two) may change your savings habits because of the costs of raising a child. Sometime life happens and you have to change your retirement savings habits. However, you should still always be saving in some capacity. Even if you only save enough to receive your employer’s match, it is better than not saving at all.
As you can see, there is a lot you can learn about retirement savings from a college basketball game. So, the next time you think about retirement planning or college basketball, think about winning the game and saving for your future self.