In 2017, the Astros gave hurricane-battered Houston a reason to celebrate by achieving their very first World Series championship. After winning 101 regular season games and 11 playoff games, the Astros claimed their place in baseball history and added a silver lining to the city’s difficult year. Planning for a comfortable retirement entails some of the same challenges as achieving championships in baseball.  Let’s examine these parallels to see what lessons and insights can be drawn from this analogy.

Lesson 1 – Identify goals and implement a plan.

The Astros did not win the 2017 world championship by mere chance. They also didn’t accomplish their feat overnight. Instead, they steadily followed through on a plan laid out five years earlier, in the wake of many losing seasons. Achieving our long-term financial goals is no different. Before we can start down the road to building a secure retirement, we need to articulate our vision for the future and accurately identify the individual goals that contribute to building that vision.

How much income will you need?

The typical rule of thumb is we need about 75 percent of our current annual income in retirement to maintain our lifestyle. Each person’s vision is unique, however; some in-depth personal reflection is useful in developing a plan that fits your circumstances.

  • What kind of lifestyle are you aiming for?
  • Do you plan on actually retiring, or will you keep on working as long as you’re physically able?
  • Are there places you want to see or tasks that are important to you to accomplish?
  • What is your personal life mission?

Once you have clarified your goals, you can create and implement a financial plan to ensure that you’ll have adequate income to achieve them.

Lesson 2 – Have the patience to stick with a well-thought-out plan, but adjust when needed.

During our investment horizon, there will be many ups and downs — just like a baseball season. In 2012, the Astros lost 107 games, giving them the worst record in baseball for that year. There may even be unpredictable outside events, like Hurricane Harvey, that blow familiar landmarks away. Regardless, it’s essential to keep two things in mind:

First, a successful retirement strategy consists of maintaining the sound plan that you started off with, rather than reacting emotionally to a challenging season. Rational calm in the face of turbulence is a strategy that pays off — whether in sports or in financial planning. You can contribute to this calm by reducing risk. As you approach your planned retirement date, your investment portfolio should move towards a more conservative asset allocation. You may also need to overcome the occasional impulse, such as using your nest egg to purchase a big-ticket item or to jump into an enticing venture investment. Instead, you’ll want to use your nest egg for your income needs in retirement.

Secondly, a sustainable financial plan includes flexibility to adapt to life’s twists and turns. Your time horizon or goals may change, or stock market conditions could take an unexpected turn. Contingency planning is an essential element in financial sustainability.  Do you have aging parents, for example? Do you have a response prepared in case of long-term disability of a family member? Adequate cash reserves are essential to maintaining your agility.

Lesson 3 – Have a diversified team.

The 2017 Astros were successful because they had put together a team with all the diverse strengths that would be needed to endure a challenging season. Their offense and defense were both solid, and they brought great intangibles as well. The benefits of diversity are equally important to retirement planning.

Each element of a diversified portfolio plays a role in achieving your long-term goals. Owning funds rather than individual stocks is a way to leverage diversity.  Your holdings should be well-balanced across many asset classes and sectors as well. The right balance between tax-deferred and taxable accounts becomes more essential for high net worth investors. If too much weight is given to tax-deferred vehicles, it can lead to unreasonable tax burdens during retirement and to complications with passing your wealth on to the next generation. Integrating your retirement and estate planning often calls for careful coordination, as in how assets are registered and transferred.

The key to achieving our financial dreams rests in trusting your plan and maintaining agility. Retirement planning requires steadiness, but that shouldn’t be confused with neglect. Long-term financial planning is an active endeavor, because you’re always going to be adjusting for new conditions as they unfold.  The combination of careful planning, agility and diversity are the foundation for a winning future — in any aspect of our lives.

As always, past performance provides no indication of future results. The market views and opinions expressed above reflect the opinions of Sugden Wealth Management and are not intended to predict or forecast the performance of any security, market, or index mentioned.