It’s been 37 years since the world has experienced a Triple Crown winner! An amazing achievement! What lessons can we glean from American Pharoah’s accomplishment to help us attain our own retirement “triple crown” status?
The Triple Crown is the most difficult and elusive trophy to capture in all of sports. Over the past 97 years, only twelve horses have achieved the quest of the Triple Crown. Until American Pharoah won this past Saturday, the last celebration for a Triple Crown winner was in 1978. A three-year-old thoroughbred must win three races - Kentucky Derby, Preakness, and Belmont Stakes, each at different distances over a span of five weeks.
Sometimes achieving the quest of a financially secure retirement can appear as elusive and difficult. American Pharoah made achieving the Triple Crown look easy, but that horse trained every day and improved his odds of winning by following the advice of his trainer and jockey. You can greatly improve your odds to financial security by following this Triple Crown advice.
The Kentucky Derby
The Triple Crown begins in Louisville at the Kentucky Derby on the first Saturday in May. The mile and one-quarter race at Churchill Downs is the most prestigious horse race and lays the foundation for the Triple Crown journey.The foundation for a secure retirement journey begins by being “Affirmed” (1978) in your savings and not to “Whirlaway” (1941) your income. Have your savings automatically deducted from your pay to your employer retirement plan, IRA (or Roth IRA) and/or brokerage account.
Taking on too much debt is a great hindrance to financial security and many turn to credit cards when in financial need. Allowing a balance to accumulate on credit cards at an interest rate of 18% to 21% can create a “Seattle Slew” (1977) of financial problems. To avoid the “Assault” (1946) of credit card debt, establish a budget and watch your spending like a “War Admiral” (1937) instead of spending like a “Gallant Fox” (1930).
One way to avoid a “Citation” (1948) is to set aside cash to use in the event of an emergency. Your emergency account should contain sufficient funds to pay for three to six months of your living expenses.
The Preakness
The second leg of the Triple Crown is the Preakness held in Baltimore, Maryland, at Pimlico two weeks after the Kentucky Derby. Since 1978, thirteen horses have won both the Kentucky Derby and this mile and three-sixteenths race, putting themselves one race away from the Triple Crown.In the middle of your journey, you want to go for the win, but protect all the ground you have gained. Review your life and disability insurance to ensure you have sufficient coverage. Review your property and casualty insurance policy for your home and auto. Look into the benefits of long-term care insurance and how a policy can protect you financially.
Be sure your estate planning documents reflect your desires. “Sir Barton” (1919) and “Count Fleet” (1943) might have been required to name the first male child as their heir, but you can decide how you want your assets distributed. Important estate documents include your Last Will and Testament, financial power of attorney, health care power of attorney, and living will. You should also review the beneficiary designation of all life insurance policies and retirement accounts.
The Belmont Stakes
The final race of the Triple Crown is one of endurance held at Belmont Park in Elmont, New York. The Belmont Stakes is a mile and one-half race that occurs three weeks after the Preakness. One of the most spectacular Belmont Stakes races was when “Secretariat” (1973) won by 31 lengths.Secretariat is one of the greatest race horses of all time and the Oracle of “Omaha” (1935), Warren Buffet, is one of the greatest investors of all time. To successfully invest for retirement, you do not have to be the greatest or the best, you just need to make wise choices for the long-haul. You need endurance.
Review your asset allocation of fixed income and equities. Ensure that you are invested in companies of different sizes (small, medium, large) over different regions (United States and international) and with different potential (value and growth). When your portfolio is diversified, you reduce your overall risk and allow your portfolio to endure.
Summary
Retirement financial security is not as difficult and elusive as the Triple Crown trophy, but the feeling of accomplishment, victory, and success is the same. Start with the foundation of saving, budgeting, and avoiding debt. Continue by protecting the ground you have gained with insurance and estate planning. Invest for endurance so that you don’t outlive your money. American Pharoah proved that what may appear impossible can be achieved. “He ran his race, now go run yours” (paraphrased from Penny Chenery, owner of Secretariat).