4 Things March Madness and Retirement Planning Have in Common

The month of March has become synonymous with college basketball and the drama of the NCAA Tournament. Millions tune in every year to watch the buzzer-beaters and upsets with the hope that their bracket can withstand the craziness.

The month of March has become synonymous with college basketball and the drama of the NCAA Tournament. Millions tune in every year to watch the buzzer-beaters and upsets with the hope that their bracket can withstand the craziness.

You might be surprised to hear that there are many parallels between March Madness and financial planning. Much like your bracket, you want your retirement plan to withstand all of the unexpected and unplanned events that’ll come your way. Beyond that, there are four other aspects of the tournament that make for great planning lessons and we wanted to share those with you.

It might give you a slightly different perspective as you watch the games, but we also hope it provides you with a little more insight into keeping your financial future on track.

Predicting the Right Outcome

As you begin to fill out your bracket, you lean on past experiences, stats, and other resources to help you determine who will ultimately win the championship.

Likewise in retirement, you look for things that have worked for you before and apply those to your decisions moving forward. Certain tools help people retire with confidence and retire the way they want. The more predictability you can pull from these tools, the higher the probability you’ll have of succeeding.

Expect Upsets

Everybody loves a good upset or Cinderella story. That is, of course, unless it’s your team that falls victim to the upset and the season ends in the blink of an eye. The same thing is true in the financial world. Everything that happens has winners and losers.

The market is a great example of that as there are two sides to every trade. Rising interest rates might hurt people invested in bond funds but help someone who likes to keep a lot of money in the bank. A change in tax laws might help millions of people with lower incomes but hurt high-income earners.

The lesson here is don’t let anyone tell you that any particular outcome is inherently good or bad. It all depends on what team you’re on.

Picking your own team to win

Whether your team is a top seed or a bubble team, it’s easy to let your heart convince you that this is the year they go on a run in March and cut down the net. So you go ahead and fill them in as the champion in your bracket and hope for the best.

The easy comparison here is people who invest too heavily in company stock from their current employer. They know the company so well from working there and they believe in the future of the business so they talk themselves into having more exposure to that stock than they would as an objective onlooker.

Making risky picks

The last parallel is a pretty obvious one. If you pick a couple minor upsets in your bracket but they don’t pan out, that’s not a big deal. You probably won’t lose much ground. But if you go big and pick a 15 or 16-seed to win and pick all the 1-seeds to lose before the Final Four, you could be in very bad shape at the end.

With investing, it’s fine to take a few risks here and there. But you don’t want to have all of your investments be super high risk. Plus, your risk level should be changing based on where you are in relation to retirement. You can’t go all-in on risk if you’re retiring soon or need the money for something in a short period of time.

All of these items are part of the comprehensive planning process that we help people with every day. If you need help putting a retirement game plan together, get in touch with us and we’ll start piecing together a strategy that’s customized for your needs.

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