How Football and Annuities Can Defend Against Risk in Retirement
Football can teach retirement investors a lot about managing risk. And if predictions of a markets slump are accurate, one strategy will be particularly useful.
In a previous article, I compared the fourth quarter of a football game to planning for and achieving a successful long-term retirement. And after reflecting on the 2025-26 NFL season, I feel it's time for an update.
We can learn a lot from football colloquialisms, such as "defense wins championships," "take the points," "don't give up the big play" and, my personal favorite, the presence of a person on the defensive side of the field called a "safety."
These strategies may be especially useful at the present time, when we're potentially on the precipice of a substantial and long-term pullback of market valuations.
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Consider these two data-backed points:
One, you can compare the S&P 500 returns with the Cyclically Adjusted Price to Earnings (CAPE) ratios for the same index (you can get a visual here from MacroMicro). The Schiller CAPE ratio is a tool to assess long-term stock market valuations, which suggests that higher CAPE ratios might indicate lower returns over the next few years.
At the end of 2025 and coming into 2026, the CAPE ratio for the S&P 500 was 39.59. The last time we have seen CAPE ratios reach these dizzying heights was in December 1999, when the CAPE ratio reached a peak of 44.2 and remained above 40 for the first nine months of 2000.
Meanwhile, the S&P 500 hit a peak of 1,527 on March 24, 2000, and as the dot-com bubble ensued, it tumbled 49% from its peak in March 2000 to a trough of roughly 777 in October 2002.
This potential outcome would be extremely jarring to today's investors, who have unwittingly lulled themselves into expecting returns in the S&P 500 close to 20% or more over the last three calendar years.
And, two, you can see in this chart from GuruFocus.com how higher price-to-earnings (P/E) ratios in the S&P 500 relate to the timing of recessions. The 1929 Great Depression had a CAPE ratio of 32 at its peak in the months preceding the crash, the Dot-com bubble had a CAPE ratio that reached a peak of 44, and the 2007 Great Recession had a CAPE ratio that floated around 27 for months prior to a 57% drop in the S&P 500 from 2007 to 2009.
It should be cause for concern that, as mentioned before, the CAPE ratio reached 39.59 at the start of the year. These are, historically, some of the highest levels of market valuation we have ever seen with the S&P 500.
As the expression goes, history doesn't repeat itself, but it often rhymes.
So how do football colloquialisms tie into these market-related charts? Let's take a look.
Defense wins championships
The Seattle Seahawks vs New England Patriots Superbowl LX was such a defensive battle that the game was boring for most football fans, and frankly, devastating for rabid, lifetime Patriots fans (like this writer).
Effectively and consistently managing risk (playing sound defense), like the Seahawks did, is what investors should be doing now, particularly if they are approaching retirement or already retired.
Take the points
In an historically low-scoring AFC Championship game this year, the Patriots ousted the Denver Broncos. On a key 4th-and-1 play early in the game, Broncos coach Sean Payton "went for it" in an attempt to get the first down versus attempting a fairly easy field goal. Even the announcer said, "You really should take the points with two very stingy defenses on the field."
But the coach didn't take the points, and the Patriots stopped them and got the ball back on downs. The Patriots ended up winning the game by a score of 13-10 in a snowy second half, where they mostly ran three plays and punted the ball away several times to manage field position.
It was a very tough environment for both teams, where neither offense could make much progress. Perhaps we are looking at something similar in today's stock market, as indicated in the previous charts.
The analogy is to take profit, particularly when we are following three very successful calendar years in a row in the S&P 500. Taking money off the table and counting it as profit is very much like taking the points in a game where a lot is at stake, such as your entire retirement nest egg.
Safety
Why does football even have a position called safety? The answer is that there needs to be someone who makes absolutely sure the team does not give up such a big play that it would be hard to recover.
This would be just like enduring a substantial market correction or long-term downturn, either in retirement or just before it.
Managing risk tolerance is critical right now for all clients, not just those facing retirement, partly because people have lulled themselves into believing the market will only go up.
Again, after three strong S&P 500 calendar years in a row, they should probably be thinking the exact opposite, to avoid giving back all those returns.
Safe money strategies
In fact, there is an entire genre of financial instruments that fulfills the same role as a safety — stopping losses and not giving up the big play.
These are called "safe money strategies." They allow you to put an amount of money into an investment that will protect your principal and won't lose any value based on market fluctuations, yet still have the opportunity to grow by the very same force of market performance.
To grossly oversimplify these solutions, which primarily exist inside fixed indexed annuities and indexed universal life insurance, think of them as the safety associated with a money market, but with the opportunity to grow significantly more than the sub-4% accounts currently available.
In fact, when I recently looked back from 2000 to 2025 to plot the S&P 500 annual returns sequentially and compare them with a safe money strategy that had a 0% floor (aka no downside) and an 8.8% cap on an index pegged to the S&P 500, the results were shocking. Even with a cap of 8.8%, having a floor of 0% and reducing the impact that years of negative market return can have on retirement assets can have a significant impact on the long term growth of your money.
This is for conceptual and informational use only; this does not represent a recommendation to buy a specific product or investment. McAdam, LLC is not a tax advisory firm thus this does not constitute tax advice. Any tax decisions should be made with your tax professionals. Hypothetical returns using S&P 500 annual returns, an 8.8% cap rate and an annual floor of 0%.
This raises the question, why aren't more people using safe money strategies? In my opinion, there are three main reasons:
1. They don't know anything about them, even though they have now been around for 31 years.
2. Most financial advisers are really only money managers or asset managers. As such, all of their solutions tend to be market-oriented instruments such as stocks, mutual funds, ETFs and bonds.
In the example above, if you were to add a column for 10-year treasuries (aka intermediate bonds) over that same time frame, the safe money strategy would blow them away. This is because bonds can lose value, whereas a safe money strategy like this one cannot.
The phenomenon of never losing but always being able to win is a powerful long-term force, which most clients do not take advantage of.
As in football, people like to watch the high-flying gains of a strong offense more than bragging about a stingy defense. Defense may not seem anywhere near as alluring, and yet it is critical to a well-constructed retirement income plan.
3. The single biggest reason why people do not use safe money strategies is because the most common deployment is through the use of fixed index annuities. Annuities are deeply maligned in much of the mainstream media and throughout Google search results.
In fact, a very well-known financial company that spends over $100 million per year on advertising (according to a recent interview with its CEO) devotes an extraordinary percentage of that advertising to the task of denouncing annuities, as well as other financial professionals.
If you also can't stand those political campaign attack ads, then you might ask why? Could it be because there are now over $3 trillion in annuities, making that a good marketplace for them to go shopping for money management assets?
Ironically, the critical pamphlet includes several troublesome arguments that do not fully reflect how many modern annuities work. Because it comes from a well-known brand and echoes views that are commonly repeated online, many readers assume the claims represent the full picture. In reality, the facts surrounding annuities are often more nuanced.
Having said all of this, I'm not saying that fixed index annuities are for everyone. Nor am I suggesting that you should put all of your money into such a thing. But having some money in a very safe investment is like having the NFL's best safeties on your team.
Ultimately, when constructing a safe and protected retirement, you may want to take advantage of a paradigm that my firm has been using for a long time: Spend, protect, grow. We find it so effective that a little over two years ago I decided to write a book about it.
I don't care if you don't buy the book. All I care about is that you make your decisions based on facts and not hyperbole. A lot of the negatives circulated about annuities are patently false with respect to the programs that many people use today.
You owe it to yourself to determine how to get the league's best "safeties" on your team and protect what you have worked your whole life to accumulate, so that you can enjoy your golden years. Not only has football changed in the past 30 years, but so has retirement.
One last thing. The last Superbowl, so heavily defense oriented, was pretty boring to non-Seattle or non-New England fans. It also may be boring to take money out of a growing asset just to protect it.
But it wins, and when it comes to your retirement, winning is so much bigger than even the NFL's biggest game. It's a ticket to your own Hall of Fame.
This article is provided by McAdam LLC ("McAdam" or the "Firm") for informational purposes only. Investing involves the risk of loss, and investors should be prepared to bear potential losses. Past performance may not be indicative of future results and may have been impacted by events and economic conditions that will not prevail in the future. No portion of this article is to be construed as a solicitation to buy or sell a security or the provision of personalized investment, tax, or legal advice. Certain information contained in this report is derived from sources that McAdam believes to be reliable; however, the Firm does not guarantee the accuracy or timeliness of such information and assumes no liability for any resulting damages.
Securities offered only by duly registered individuals through Madison Avenue Securities, LLC (MAS), member FINRA/SIPC. Investment advisory services offered only by duly registered individuals of McAdam, LLC, a registered investment advisor. Insurance products and services offered through McAdam Financial. McAdam, LLC and McAdam Financial are not affiliated with MAS. This article is the sole opinion of this individual and is not indicative of the firm's belief.
Safe Money Strategies refers to fixed investments that provide downside protection and upside potential. These strategies include liquidity restrictions and surrender fee schedules that apply for part of the investment term. Please consult with your financial advisor on specific products, structure, and features for each particular strategy.
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