A Runner’s Guide to Retirement Planning.

My first marathon was a disaster.   After a years of running short races, I decided to graduate to a marathon.   The 1991 Los Angeles Marathon was going to be my first.   On race day I thought I was ready for the 26.2-mile journey through LA.

I was young, naïve and in shape so the only strategy I employed was to run as fast as I could for as long as I could.  In short, I had no strategy.  I was running without a plan.

My first miscalculation was my attire.  I wore cotton.  Cotton is a major no-no for marathon runners.  After a couple of miles, the shirt had to go.   I took it off and ditched it on the side of the road and this brought up another issue.  I was now shirtless and running without sunscreen.  As the Southern California Sun bore down on me I started to burn.

During the race I avoided all the aid stations until mile twenty.  At this point I was done.  I was dehydrated and sunburned.  I looked like a big red salt lick.  I started to walk but was saved by a young boy who gave me a giant bottle of Gatorade.  His gift gave me enough fuel to get to the next aid station.   The aid stations for the last 6.2 miles were of little use because I couldn’t drink enough Gatorade to cure my thirst.

I finally finished the race and made it home where I was able to lick my wounds and reflect on the events of the day.

If I was going to continue to run marathons, I needed a game plan.  As the years went on I read books on running and applied what I learned.  As a result, my race experiences went up and my race times went down.  I was fortunate enough to run in the 2011 Boston Marathon and in 2015 I set a PR in San Diego.

What does this have to do with retirement planning?

If you’re a runner, you’re most likely patient, disciplined and goal oriented.   Are you the same when it comes to planning your retirement?  Do you spend as much time planning your retirement route as you do your running route?

Here are a few strategies to help get you to the retirement finish line with a smile on your face.

  1. A plan is needed. A sound retirement and financial plan will help guide your steps.  It will help align your investment holdings to your goals so they’re both working for your benefit.  The plan will give you a baseline of your current financial situation.
  2. Think long term. A marathon, as you know, is 26.2 miles so don’t worry about what is happening at mile 3 or 4.  If you’re retiring in 10, 20 or 30 years let your investments run and pay little attention to short term moves in the markets.
  3. Find the right shoes. Running a marathon in high quality, light weight shoes makes all the difference in the world.  So, too, when it comes to your investments.  The “lighter” your fees the better your investment results.  You have the ability to control your costs.  When you’re working on your financial plan you should also do a thorough review of your investment holdings.  It’s imperative to focus on low cost index funds and investments so you can drive your expenses lower.
  4. Set your own pace. A large marathon may have twenty, thirty or forty thousand runners.  It’s likely you will pass, and get passed, by another runner during the race.    Each runner in a race has their own goal so don’t get caught up trying to match them step for step.  You’ll be better served to focus on your own goal and pace.   Your retirement goals are yours only so don’t try to keep up with the Joneses.   Your financial plan will help set your retirement pace.
  5. Re-fuel and check in. Take advantage of all the aid stations on the race route.  Taking a few seconds to hydrate and re-fuel will treat you well for the back half of the marathon.   Once your retirement plan is up and running you’d be wise to check it every year to make sure your still on pace to achieve your goals.
  6. Run with a coach or a team. Your running results may improve if you run with a coach or a team.  Who doesn’t want a running partner or two when it’s 5:00 in the morning and raining?  Running with a team will help you stay focused and motivated.  A financial coach or a team of trusted advisors can do the same.  Your team will support you on your retirement journey.   A financial coach can assist you with all decisions financials.
  7. Go fast. Stocks will be your best friend during your retirement expedition.   Stocks purchased for the long haul will allow your assets to grow faster than “safe” investments like bonds or cash.
  8. When you cross the finish line stop running. The pain of the last few hours pales in comparison to the feeling you get when you see the finish line.   Your retirement plan will give you a finish line.  If you’ve achieved the assets needed for your retirement, you can now afford to stop running and lock in your gains.   A move to more conservative assets likes bonds or cash can help preserve your assets.

A plan for running and retirement can keep you going for a long time.   I would encourage you to get out there and start planning!

We all know that if you run, you are pretty much choosing a life of success because of it. Deena Kastor.

Bill Parrott is the President and CEO of Parrott Wealth Management, LLC.  www.parrottwealth.com.

July 26, 2016

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