Fantasy Finance: The Game and The Stakes are very real

Michael Franks |

My Fantasy Football team is called Double Trouble, named for my twin sons.  After what looked like a promising draft my team is in trouble.  Yet, even after a nail biting loss this weekend it is something that I very much enjoy.

I am not alone.

Fantasy Football has become a very big deal.  An estimated 30 million people are playing. A recent Challenger, Gray, and Christmas study estimates the loss to productivity is close to $1 billion weekly as people are spending an hour or two every week checking in on their players and trying to make all the right moves.

I can’t find a specific hourly breakdown of the time spent weekly on retirement planning, but  I’ve seen it written several times that people are spending more time on planning vacations then retirement.  Or doing more research to buy a refrigerator then to buy a mutual fund. If something as lame as appliances is getting more attention than finances, I think it is a safe leap to think people are spending more time on fantasy football then financial planning.

I am willing to concede that fantasy football is more fun if you are willing to concede that your finances are so, so much more important! In an effort to get the appropriate amount of focus on finances, I ask you to join me in some FANTASY FINANCE.


Unlike in Fantasy Football, where the defense is an afterthought drafted in the second- to-last round, I believe you need to focus on your financial defense first. Also, unlike fantasy football where the defense is scored as a unit, you are going to need individual defenders.

Your emergency fund is there to bail you out when something else has gone wrong just like a free safety on a defense. The funding goal is 3 to 6 months’ worth of expenses. You want to keep this money someplace liquid such as a checking or saving account, not a CD, in case you need to access it quickly. You’ll decide what qualifies as an emergency but you’ll always sleep better having some emergency cash set aside.

Insurance is your defensive line.  Some teams have four up front while others only have three. It depends on your roster and personnel. Your specific insurance needs will also depend on your personal circumstances. Everyone should have auto coverage and home owners or renters insurance. Once you own a home an umbrella policy also makes sense but other needs will vary.

If you are employed you don’t want to forget about the importance of disability insurance. Your ability to earn income will be your greatest assets over your life.  It is definitely something you want to defend. Coverage typically lasts to age 65 and will be able to replace 60% of your income. You can add various riders and the most important of these, in my opinion, is a cost of living adjustment to account for inflation.

Your life insurance needs will really be determined by your current situation. A working individual with minor children and a mortgage clearly needs life insurance.  I am a big fan of term coverage for the leverage you can get on the dollars spent. If you are retired or nearing retirement, your mortgage is paid off and your children have grown, you may no longer need life insurance.  The premiums might be better spent on long term care insurance (LTC). LTC can pay for expensive medical care at the end of your life. You want to protect savings for the surviving spouse to live on.

Estate planning is your team’s linebackers.  Like all of the great middle linebackers in history, talking estate planning strikes fear into us. No one wants to think about these things but they are important. A lot of assets will pass based on how they are titled or if beneficiaries are named. A Will is still crucial in naming guardians for minor children.  It will also help the disposition of personal items and assets without beneficiaries. You should also consider getting a living will, healthcare powers of attorney, and financial powers of attorney in place.  In the event of something terrible happening this would make a difficult situation a little easier for your loved ones. It is a good practice to review your estate plan every 5 to 7 years or after major life changes. You want to make sure bequests, beneficiaries, and representatives are still appropriate.


Your ability to save 10-20% of your gross income will be your quarterback. No team wins without a good quarterback and no financial plan succeeds without a commitment to savings. Your savings will set the tone for your plan, involve the other players and distribute the “ball” - your money.

The way the scoring works in Fantasy Football running backs get a lot of attention. The ease in which to save, taking a percentage out of each paycheck, means that the bulk of people’s savings go into retirement accounts available through work.

401k’s (or a 403b which works a lot like a 401k but is only available to public and nonprofit employees) are the workhorses for most financial plans and they will be your running backs.  Unlike most NFL running backs that have a short career, these accounts are long term accounts.  In traditional plans you get a tax deduction for contributions and the money grows tax deferred until you make withdrawals. If you make a withdrawal prior to age 59 ½ you will be assessed a 10% penalty on top of the ordinary taxes you owe.

The fact that you are contributing to a 401k plan each paycheck allows you to keep your asset allocation well balanced. Also by putting the same amount in each check you end up buying more shares when they are down and less when they are up. This is dollar cost averaging and it is a good thing.

If your company will give a match for a retirement plan you should take advantage of it. This is free money deposited on your behalf. The place kicker in football is somewhat at the mercy of the rest of the team to score or put him in position to kick a field goal. You can’t control whether your company will match, and you should save either way, but when the match is in place it is a nice kicker to your savings.

Other retirement accounts people use to save are IRAs.  Most football teams have one or maybe two running backs that score, but they many receivers with scoring potential.  IRAs are like 401ks as far as taxation goes, but they offer a lot more investment options. You can buy several assets including, but not limited to, individual stocks, individual bonds, CD, annuities, and mutual funds.  You also can use a ROTH IRA. A ROTH differs from the traditional IRA because it does not give a tax deduction up front, but offers tax free withdrawals after meeting age and time requirements. ROTHs are also nice because they do not force required distributions after age 70 ½. These can be real long term accounts, think your fast, deep threat receiver.

Both 401ks and IRA have annual contribution limits. If someone has maxed out these accounts and is still looking to save they will establish a brokerage account.  The brokerage account will be your tight end. If all the receivers are covered the quarterback can feed the tight end the ball. A brokerage account is like a regular saving account but you can hold investments – stocks, bonds, mutual funds, etc. Tax treatment is different for a brokerage account than for retirement accounts. A brokerage account is taxed on interest, dividends, and capital gains.  Capital gains are created when you buy and sell a security. The difference between the lower purchase price and higher sales price is the gain. Since we know stocks don’t always go up you can also have a capital loss.

Just as you need to monitor your Fantasy Football team, making lineup changes in an effort to always have the best team on the field, you will need to monitor your Fantasy Finance team. Investments are not going to always work out as we hoped. Tax policies will change over the years. Jobs will come and go. Your own life and ability to take risk will change.  You’ll need to tweak your savings goals and asset allocations and you’ll need to review your insurance needs and update your estate plans.

Keep your eye on the ball and make sure you always have your best team on the field!


Stock investing includes risks, including fluctuating prices and loss of principal.

Contributions to a traditional IRA may be tax deductible in the contribution year, with current income tax due at withdrawal.  Withdrawals prior to age 59 ½ may result in a 10% IRS penalty tax in addition to current income tax.

A Roth IRA offers tax deferral on any earnings in the account. Qualified withdrawals of earnings from the account are tax-free. Withdrawals of earnings prior to age 59 ½ or prior to the account being opened for 5 years, whichever is later, may result in a 10% IRS penalty tax. Limitations and restrictions may apply.

This blog post was created for educational and informational purposes only and is not intended as ERISA, tax, legal or investment advice. If you are seeking investment advice specific to your needs, such advice services must be obtained on your own separate from this post.