Retirement Planning Lessons from Cricket

Have you felt the adrenaline rush when the Indian cricket team is a few minutes away from victory, or the excitement when the team wins the match?

Although you can only see the players hitting the ball or running after it, there is a lot to the cricket ground than what meets the eye. Behind the game of every cricket master, there is a lot of practice, hard work, perseverance, and a strategy.

You will be amazed to know that some of these qualities are needed to create a successful retirement plan.

Here’s how:

Lesson # 1: Start Early

In Cricket, retirement comes knocking at very early years when compared to other professions. Being aware of this fact, most of the cricketers enter into earning alternative sources of income. While some of the famous cricketers have opened up restaurant chain, started their cricket academy, become commentators, actors etc etc . Taking a cue from this, planning for sunset years should run simultaneously with your career. The objective is to give your investments the longest possible time to grow.

For instance, even if you invest Rs 10,000 monthly and you earn a return of 8% p.a., you can accumulate:

• Up to Rs 1.5 crore by the time you reach 60, provided you start at the age of 30,
• Only up to Rs. 95 lakhs if you delay the investment by just five years and start at 35

That is a loss of more than 30% in just five years.

Therefore, start investing for your retirement goals as early in life as possible so that you have a comfortable retirement. With smart investment choices, you may also consider retiring young.

Lesson#2: Create the Right Mix

The success of a cricket team largely depends on the right selection of players. The selection, on the other hand, depends on the type of match (one day, test series, etc.), the location of the match, weather conditions, and even the opposition. The team will need a mix of different yet complementary bowling, batting and fielding skills.

Similarly, while planning for retirement, you need to invest based on your risk profile and financial responsibilities.

For example, if you are single at this moment, and have 30 years to retire, you may benefit from the long-term exponential returns of equity investments. However, once you are just 5 to 10 years away from retirement, safer and less volatile investments like pension plans of life insurers, fixed deposits, etc. will be more suitable.

Lesson#3: Plan for Contingency

If you are a cricket fan, you may already know that cricket teams are always made up of 15 players, even when only 11 players are needed to play the game. The four extra players are the contingency plan for the team. They will hit the ground only when one of the playing 11 is injured during the game. In the absence of this contingency plan, the team will have to field with a lesser number of players if some are injured and unable to play.

Similarly, when planning for retirement, your investments are focused towards your long-term goals. You should also work on a contingency plan along with the plan for retirement.

A contingency plan will ensure that life’s uncertain expenses do not derail your retirement goals.

For contingency planning, there are a few specific things you can do:

• Keep three to six months of expenses in a safe and easily accessible investment (like super saver account)
• Cover yourself and family with health and critical illness plans, as unforeseen health conditions are the main cause of huge financial hits one faces

Thus, your retirement savings will continue to grow unhindered, through your life’s ups and downs.

Lesson#4: Adapt To Changing Situations

During the match, you will notice that the captain often changes the fielding position of the players depending on the side of the field where the batsman is scoring maximum runs. For example: when a batsman is making the maximum hits towards short-midwicket, the captain instantly positions strong fielders in and around that area to save runs.

Similarly, for your retirement planning to succeed, it is necessary for you to revisit the plan regularly and factor in the changing life situations.

For example, you may have invested a lot in equity when you were just 30, and by the age of 50, you have accumulated a large corpus in equity. But since now your aim is wealth-preservation, you must shift your wealth from volatile equities to more stable pension schemes or similar investments.

The Final Over

While the lessons from the cricket masters point at simple principles for a comfortable retirement, they also state that:

“You must make your money work hard and long towards your retirement goal and ensure that you retire not your income.”