Racing and Retirement

Racing and Retirement

Every year in May, I get excited for the return of the Indianapolis 500. It’s called The Greatest Spectacle in Racing for a reason: every Memorial Day weekend, nearly 300,000 people pack themselves into a stadium around a 2.5-mile oval just west of Indianapolis. This race involves 33 cars on a track, driving at speeds exceeding 220 mph, and the flying start is one of the most exciting moments in racing. You can see team colors around the track – bright, vibrant, and distinct. The cars flash by in a blur, and yet have the same distinct color pattern.

Lasting between 3 and 5 hours, this particular race becomes more about endurance than speed. Engines fail. Accidents happen. Mistakes in the pit force a car off the track. Any number of issues can come up over 500 miles, so winning requires razor-sharp focus.

Isn’t that just like retirement planning?

There is so much trouble that can come along on your way to the finish line – healthcare costs, long term care events, inflation, tax bracket changes and uncertain life expectancies. Clients have to stay in the race in order to win it with some level of guarantee until they reach the finish line.

It’s not where you start retirement planning so much as how you finish it. In 102 races, there have only been 20 winners that have started from the fastest qualifying position. Don’t panic if your client doesn’t seem to have enough assets – just think differently about how to help them get to the end of the race. Keep them in a position to maintain momentum, maneuver smoothly in traffic and pull away from the pack.

Client’s retirement funds must have the power to grow – hopefully, free of taxes during the accumulation phase so that the account has more money to produce income. At the same time, the portfolio must have some level of risk mitigation, especially in the final 10-15 years of accumulation. There has to be a balance of protection and growth.

As the final 20 laps tick down, the tactics change. Drivers get more aggressive; crew managers position the car for the optimum level of fuel to make it faster, yet still get to the finish. The sequence of return risk is no different. However, there are better ways to mitigate the potential risks. Planners have to find a way to get maximum income for the longest period of time while protecting inflation risks and price fluctuations.

It’s a long race with many levers that have to be pulled in order to win– not just assets under management with a questionable withdrawal percentage. Having flexibility, consistency, and power ultimately wins the race.

Winning Strategy: Make sure your clients cross the finish line by keeping them in the race first and then focusing on strategies that keep them out of trouble.

About the Author
Mike McGlothlin is a team leader, retirement industry activist and disciple of Indiana Hoosier basketball. In addition to being EVP of retirement at Ash Brokerage, he is a sought-after writer and speaker. His web series, “Winning Strategies,” provides insight and motivation for financial advisors in many forms – blogs, books, videos, podcasts and more. His latest book, “Free Throw for Financial Professionals,” is available now – learn more at