You've met with your financial advisor and she said you're doing well. You have accumulated almost $400,000 in your retirement account. She tells you that you can increase your nest egg to $1million by the time you are 65, and comfortably live the retirement lifestyle that you've dreamed about. What is the financial plan that you have in place to accumulate the remaining 60% of that goal? Thinking of your financial plan the same way that professional athletes strategize about a game plan can help you achieve your goals and avoid any major losses.
Strategize Like a Pro Athlete
I was watching my favorite football team, the Seahawks, on television the other day. They had the ball on their own 40-yard line, with 60 more yards to gain to score a touchdown. Their coach, Pete Carroll, was conferring with the quarterback, Russell Wilson, on the sidelines. It struck me, at that moment, that their game plan has similarities to your financial plan. You have accomplished 40% of your goal with the other 60% remaining. Much of the terminology in football is even the same as in financial planning: goals, gains, losses, protection, etc. (For more, see: Starting Early With Financial Planning.)
Team Roles
Your financial advisor can be the coach by advising you on what plays to run. You are the quarterback and you are responsible for executing those plays on the field. The football represents your money. It even kind of looks like a nest egg. Your center could be your employer, hiking the football to you. If you elect to hold the football yourself and try to run with it, your gains will likely be meager ones, and you may never reach the goal line. Fortunately, you have an entire team to help you make those gains down the field:
Wide Receiver (left) = IRA
Wide Receiver (right) = 401(k)
Tight End = Taxable brokerage
Running Back = Alternative investments (e.g. real estate)
Kicker = Goal adjustment (i.e., if you can’t reach the goal line, you can settle for something less like a three-point field goal versus a six-point touchdown.)
Linemen = Insurance policies, CPAs and estate attorneys. These players are your protection. They prevent the opposing team from tackling you for negative yardage.
Your wide receivers have the potential for the biggest gains during the game since IRAs and 401(k)s grow tax deferred. Your tight end holds the taxable brokerage account but with smart tax strategies in place, you can make consistent gains down the field. Your running back gives you diversification in your playbook, so that when your receivers are not producing with stocks and bonds, your running back can produce gains with alternative investments.
The opposing team has a defense that is trying to prevent your gains, or even create losses. The defense focused on stopping your receivers and running back include risky investments, inflation and discretionary spending. The defense trying to get past your linemen and tackle you are illnesses, taxes and lawsuits.
Creating an effective financial plan involves a whole team of players that you can lean on to create and execute a sound financial plan and score that touchdown. (For more, see: Financial Planning: It's About More Than Money.)
cr. https://www.investopedia.com/advisor-network/articles/financial-planning-playing-football/
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