Retirement On The Gridiron

It is time now for Mr. Stillman's Opus with John Stillman of Rosewood Wealth Management and we find ourselves right here in the middle of football season. I've been watching a lot of football games lately. At this time of the year, you can find football on TV almost every night a week. So why not take some concepts from the game of football and apply them to our retirement planning.

First of all, we talk about this. All the time on this show, the red zone. What exactly does it mean when you're in the red zone and how does that relate to football? Yeah, so the red zone obviously is important both for the offense and the defense. In fact, I was watching the Panthers, I don't know if it was this past week or the week before and they were talking about how the Panthers had not yet stopped a team once they got in the red zone. If you get in the red zone against the Panthers, you were going to score.

And that's what you want out of your offense. You want to be sure that you're scoring points in the red zone. You can't have turnovers. You can't march all the way down the field and then turn it over in the red zone. You can't get down to the 3 or 4 yard line and then have to settle for a field goal. If you get that close, more often than not, you need a touchdown and if you have to get a field goal from time to time, so be it. Graham Gano doesn't need to be anywhere close to the red zone in order to score for the Panthers.

You can't get from midfield. But so often, you see teams make mistakes in the red zone and those mistakes are so magnified because it's so hard to get there in the first place. And if you screw it up once you get there, well it's really hard to get back sometimes. So you have to capitalize on your opportunities when you're in the red zone. Well, there's also a red zone when it comes to financial planning and that's the last 5 to 10 years before you retire. That's like being inside the 20 yard line on the football field.

And the same things are true. You can't afford to make mistakes. You worked really hard to get to this point. It's not easy to get there but you've been saving and investing for 30 or 40 years and now here you are in the red zone. You can't afford to screw it up. So make sure you're not making mistakes.

Make sure your decisions are smart, that you're being as efficient as possible, that you're not taking too much risk. Because think about it in football terms. You know, you don't want to be throwing a lot of really risky passes that could get picked off in the red zone. Because you know, at the very least, if you just hold onto the ball you can at least get a field goal out of it. Yes, we'd rather have a touchdown but you have to at least get that field goal. So don't take any chances that are going to prevent you from allowing that to happen.

Well, same thing in retirement planning. Let's not take risks that aren't necessary. We worked so hard to get all the way down the field here, let's not screw it up. Coaches and players and fans alike all get really frustrated when their team gets into the red zone and comes up empty.

For heaven's sake, you don't want that to happen. How about the hurry up offense? Now, hurry up offense can be really good when it comes to football but sometimes in retirement planning it doesn't work so well, does it? Well, so you see the hurry up offense and when you see it working, like your offense has done nothing all game and suddenly you're in that two minute drill and you're throwing the ball all around the field and you're like, why don't we just run this offense all the time?

Well, obviously the defense would react to it and it wouldn't work that way all the time but it can work in football when you're keeping the defense on their heels, they can't get their substitutions in on time and you're controlling the way that the game is unfolding from an offensive standpoint. So yeah, when you get down, when you're behind in the fourth quarter, you're on the hurry up offense, you're trying to create as many plays, have as many possessions as possible to give you chances to catch up. Well, in retirement planning, this doesn't work. You might feel tempted if you're behind in the fourth quarter, if you will, of your working life. If you're getting near the end of the game, you might feel like you want to take more risk to close the gap but that's almost never the best way to fix the problem. Well, you're much better off to either increase your rate of savings or maybe plan to work another year or two longer than you'd originally thought you would or maybe plan on spending a little bit less in retirement.

If you find that you're behind and the assets that you have aren't going to create the lifestyle that you want, there are better things to do than try to ratchet up the risk and make up for lost time. Let's not be out there throwing the ball all around the field if your quarterback is less than average, right? So that's the analogy that we'll take from the hurry up offense. I like that analogy.

That was good. That's good thinking on your part, on your feet. Well, victory formation. In football, you know, we all know about the victory formation and perhaps you can explain that for the non-football fans out there but how does that apply to retirement planning? Well, so victory formation is basically the opposite of the hurry up offense, right? The hurry up offense, you're down late in the game.

You're trying to catch up. With victory formation, you're leading late in the game and you just want the game to be over. Once you're at that point where you're winning the game, let's not take any chances.

We don't have to. In football, what are you doing? You're taking a knee. You know, you're up eight points.

There's a minute and a half left in the game. Just take a knee four times and be done, right? Don't play any more football than you have to.

Yeah, exactly. You don't care about gaining more yards. You're not trying to score more. All you care about is holding onto the ball. If you don't give the ball back to the other team, you can't lose. They can't score while you have the ball. So just hold onto the ball. Well, in retirement planning, sometimes you get to the point where you have enough money to create the lifestyle that you want. All you need to do is make sure that you don't lose what you have. You need to design your portfolio in such a way that you're in victory formation. You're taking a knee and you're running at the clock.

You're not playing any more football than you have to. You're not taking any chances you don't have to take. And the analogy I talked about last week was this couple who, they're investing as if they're in their 20s or 30s.

And they're both in their early 60s. And they know they're taking too much risk. They didn't know how much risk they were taking.

They knew they were taking too much. And when we put it in and did the stress test, it showed that they have a risk number of 80, which basically our program grades it from one to 100. A one is no risk at all.

One is sitting in cash at the bank. A hundred is day trading. Super high risk. So they're at an 80 out of 100. That's really high risk. That's high risk for anybody. That's basically how somebody in their late 20s, early 30s should be invested. Here they are at 64 and 63 respectively.

And they have a risk number of 80. And so what we end up with is this situation where every month he's saying to himself, you know what, I need to take some of the risk down a little bit. But you know, I've really made a lot of money the last year or two. Let me just see if I can get one more month out of it.

Let me just push it one more month. And then I'll take some of the risk out after that. And what that's equivalent to is being out there up eight points in the football game and you're still throwing the ball down the field. You're still trying to make long passes. You're throwing into double coverage.

Don't do that. Just take a knee and run at the clock. And that's what I had to impress upon them is, look, you've scored enough points already. Just don't fumble the ball and you'll be okay.

At that point, you just need to be thankful for what you got and don't try to get more. You know, one other thing I wanted to ask you about here, this is how football relates to retirement planning. And I think everybody knows that, you know, when you're you have a football team, you don't want to just send 11 guys out there on the field with no game plan, no coaching whatsoever. There is no question in my mind that good coaches make a difference.

And the same thing is true with your financial planning for your retirement. Well, that's right. And, you know, you've seen the teams where they have the same coach for years and years and years. I mean, look at the Pittsburgh Steelers. They've had three coaches in the history of their franchise. And then you have other teams. Well, let's take the Browns just right across the state line from the Steelers who have a new coach every two or three years. They've had coaches that were only there for one year. And you have no continuity.

And so it's really easy to tell the good programs versus the bad ones. And this applies in college or the NFL. If you have a lot of coaching turnover, I mean, at the college level, they'll always tell you one of the keys to success is not just having the same head coach for many years, but continuity with the assistant coaches. Yeah.

Right. Having those same guys with you year after year after year. If you think back to the John Bunning days, that was a big issue. He couldn't hold on to good assistant coaches. And it was a constant revolving door for some of those position coaches. And that was one of the things that Butch Davis did really well was he was able to get good assistance and keep them around. So how does this all relate to our retirement planning? Well, some people want to be successful or they're trying to be successful without a coach at all, which is possible. There are some people who can do very well managing their investments by themselves.

That's a very small sector of the population, but it does exist. Some people keep the same coach year after year. Pretend you had a football coach who had gone one and ten for five or six years in a row. Pretend it was Mac Brown's first years. He was one and ten, both of his first two seasons in Carolina. But what if he was one and ten every single year for eight years? That's not good.

And he was still at Carolina. Nobody would say this is okay. Well, sometimes your coach does a bad enough job that you need to get a new coach. And so a lot of times it's an emotional decision. People have been working with an advisor and they know that they're not getting the support that they should be. They know they're not getting the great advice they should be. They're not getting the communication they should be getting. But it's somebody we've worked with for 20 years. So I don't want to upset them or I don't want to make a change. Well, imagine having that mindset with a football coach. Yeah, he's been one and ten for the last eight years, but I don't want to hurt his feelings by getting a new football coach.

You would never say that. But a lot of people do that with their financial advisor. And so sometimes you're trying to do it without a coach and you just need a coach, period, to show you where the pitfalls are, the mistakes that you don't know you might be making. So that's one person to address. The other person to address is somebody who knows they have the wrong coach, but they don't want to hurt that person's feelings by making a change.

And then there's this third category. You don't know. You think your coach is good, but you really don't know. It would be like having a football team and not actually knowing whether or not you won or lost games. You just go out there and you think they do a pretty good job. You think your team looks pretty good, but you really have no idea whether you're winning or losing.

And so if you fall into any of those categories, by all means, come in, sit down with us, have a conversation. Let's figure out where you stand and if you need to make a change in your financial coaching situation or not. You've been listening to Mr. Stillman's Opus from Rosewood Wealth Management. And certainly there are a lot of parallels between preparing for football and preparing for your retirement. We appreciate your listening. John Stillman, of course, the president and founder of Rosewood Wealth Management. Carolina Wealth Stores doing business as Rosewood Wealth Management is a registered investment adviser in the state of North Carolina. The material presented is intended to be general information and should not be construed by any consumer as the rendering of personalized investment advice.