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Financial Tips for Coaching Families

In my experiences working with coaching families I have developed a unique understanding to the challenges these families face.  Below is a list of tips all coaching families should be aware of. 

In most circumstances, coaches should choose to enroll in the Optional Retirement Plan instead of the Pension, also known as the Teachers Retirement System.  Pensions typically have a longer vesting schedule which means you must be employed by the school for a specific period of time, sometimes as long as ten years, in order to receive the university’s contributions to your retirement plan.

As of 2011, it is hard to advise clients to purchase a new home when they move.  The one thing you need to increase your chances of making money from housing is time which is the one unknown as a college coach.  The housing market has many issues to resolve before housing prices can fully appreciate as they have in the past.  When you include the sales commission of 6% plus the potential risk that you carry as a homeowner, it would be very difficult to make significant money over the next few years.

Always put the monthly bills in the name of the non-coaching spouse.  In the event that a bill goes unpaid or there is a discrepancy with a previous payment, any problems with your credit will be contained.  One credit discrepancy can cost you hundreds every month on your mortgage and utilizing this method gives you the option of applying for credit without the credit issues.

Be aware that any money deposited into the TIAA Traditional investment has unique distribution rules.  In most cases, this portion of your retirement can only be taken in 10% increments meaning it will take ten years to withdraw this money.  This investment is essentially a higher yielding bond issued by TIAA CREF so it carries risk similar to a typical bond fund.  I always advise my clients to avoid the Traditional investment.

When changing jobs voluntarily, you will want to ensure that you a not taking a “silent pay cut.”  It is possible to receive a higher income a lower standard of living due to variations between the two locations in contribution rates, taxes, health care and transportation costs, and housing, to name a few.  Always find out the retirement contribution rates, vesting schedule, whether the new employer contributes to social security, state and local tax rates, utility rates, and house values.  Having this information will allow you to make a more well-informed decision.

If your summer camp money is not paid through the university but instead is included as self-employed income, be aware that you have the ability to contribute 25% of that income ($49,ooo max) into a SEP IRA as a pre-tax retirement contribution.  Utilizing this vehicle allows you to save for retirement while simultaneously reducing your tax liability.  Also be aware that any expenses you incur may be deductible as a business expense which you should discuss with your accountant.

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