Money madness and the road to retirement

If you turn on your TV today, you’re going to see…basketball. Or basketball. Unless, of course, you decide to watch…basketball.

This time of year has become known to college basketball fans as March Madness. Last week, 68 of the nation’s best men’s basketball teams and 64 of the best women’s teams got the good news they’d made it to “the Big Dance.”

According to Sports Feel Good Stories, “the annual, three-week NCAA Division I Basketball Tournament accounts for over 85% of the NCAA’s annual revenues. It’s estimated that some $9 billion are wagered on the event. The hotels in Las Vegas are at 98% capacity the first weekend of the Tourney. It’s estimated that some 60 million people fill out a bracket. Filling out the bracket, researching teams, and sneaking into the break room to watch games may account for some of the nearly $2 billion lost in workplace productivity due to March Madness.”

Oh, yes, and it’s also a big deal for the teams that play in the tournament. You can have a great season…a perfect season…and lose one game in the Championship Tournament, and all is lost. You go home empty handed.

On the other hand, every year America meets a new sweetheart – a Cinderella team no one has ever heard of, but who shows up ready to play. Sometimes they go all the way (Villanova in 1985).

If March Madness is the road to the NCAA Division I Championship, maybe we can learn a few lessons in our own games of “Retirement Money Madness,” on our own road to retirement.

64 or 68? Sixty-eight teams are selected to play in the men’s tournament, but the tournament only has 64 spots. So, eight teams play a sort of early round to fill four of the 64 slots. Sure, it’s complicated, but the tournament math only works if you start with 64 and cut that number in half (due to wins and losses) each round.

In the case of Retirement Money Madness, one of the first decisions you’ll have to make is when you wish to retire. Will you quit early, perhaps at age 64? Or will you work beyond the average age of retirement – maybe all the way to age 68 or older?

Sweet sixteen. Sixteen years from retirement for most people is about age 50 to age 55. This is the age when most of us wake up to the fact that “one day” is here. I get a lot of phone calls from freshly minted 50-year-olds. I can hear their palms sweating through the phone.

Often the kids have just moved out (or will soon), and it’s time to focus on beefing up retirement accounts, reducing debt and planning for retirement.

Elite 8: In the NCAA tournament, this is obviously the last eight teams left to play. All of these teams are good, and each are jam packed with talented players.

The last eight years prior to your own retirement are also critical. Will your house be paid off by retirement? Do you have your long-term care insurance in place? Do you know how much guaranteed income you’ll have coming in from Social Security, pensions and the like?

Final Four: In the NCAA tournament, there are now four teams left. For you, you’re four years from your planned retirement.

Check your retirement plan investment allocations. This is no time to swing for the fences, attempting to make up for lost time by taking on high levels of investment risk. Sure, it could work out to your advantage, but it might also set you back (to the Elite 8 or Sweet 16!). Consider consulting a professional investment advisor to review your retirement plan investment allocations for age-appropriate risk levels.

Also, it’s time to make sure your health insurance options are lined up. That will mean Medicare if you will be 65 or older at retirement. If you’re planning on retiring prior to age 65, does your employer offer retirement health coverage? Rarely, but it’s worth an ask. Otherwise, you’ll have to search out your options at the federal government’s Health Insurance Marketplace.

The Championship. For better or worse, there can only be one winner of the NCAA Division I Basketball Tournament. For the rest of us, it’s possible for all of us to reach our own championship level by doing the things necessary to lay a proper foundation for a solid retirement.

Good luck. Play hard. Play smart.

Win.

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