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Financial Planning For Coaches

The career path of a coach requires a different view of financial planning.  More times than not where you live is temporary, your benefits vary among institutions, your salary does not follow a continuous path, and employment opportunities are scarce.  Having a specific long term plan allows you to remain in control of your future in an uncertain industry and to focus your energy towards achieving your lifelong dreams.

Most workers have the opportunity to make their own retirement plans; on their own terms and at their own time.  Coaches do not.  The world of coaching will retire you.  Long gone are the days when a coach has the long-standing support needed to retire on their own terms.  If Bobby Bowden and Philip Fulmer can be forced out less than ten years removed from a National Championship then you can to.  Understanding the reality of the business you are in is essential to creating your financial plan.

Another important difference in the world of coaching is that your prime earning years often fall in the middle of your career.  Whether it is true or not, in many cases once a coach reaches fifty years of age there is a perception that the game has passed them by and they are often forced to take jobs that fall beneath their experience level.  You cannot rely on catching up to retirement later in your career simply because the salary level cannot be counted on.

Because of these dynamics, it is important that coaching families remain ahead of the curve when it comes to retirement.  This involves saving more than you might other save and living a lifestyle that is well below that of your stated salary.  Rich people don’t get rich spending money, and a high income has no bearing on your retirement lifestyle.  Your savings plan will be the largest single factor in determining what type of lifestyle you have during retirement.

University coaches have among the best retirement options available to any type of employee in the country.  Technically as state employees, you have access to the same retirement plans as the state legislature who certainly allow for generous retirement options.

For instance, the IRS limits the amount of voluntary retirement contributions for private sector employee to $17,000 in 2012.  For state employees, that amount is doubled to $34,000 when combined with a 457 deferred compensation plan.

In addition, most private companies will match an employee’s contribution to a maximum of 3% but only when combined with employee voluntary contributions, while most universities have a mandatory contribution of 12% or more, combined employee and employer contributions.  This is important because any retirement plan contribution that is mandatory does not count against your voluntary limit ($17,000.)  Thus, in many cases university coaches (and politicians) can save in excess of $60,000 compared with $17,000 in the private sector.  It is important to take advantage of these unique opportunities.

Another area where coaching families must have a different view on financial planning is determining whether to buy or rent a home at their present location.  There are many variables to making this determination but it is important to realize that the one thing you need in order to reduce the risk of losing money in a house is ‘time’ which is the one unknown in the life of a coach.

It is true that buying a house provides tax benefits and the potential to make money in appreciation, but it is also a major responsibility with potentially immense costs associated with it.  Realize that the first 6% of appreciation in your home ($18,000 on a $300,000 home) goes to your real estate agent when you sell the home.  Also remember that when news comes down that you need to relocate, this usually occurs quickly with little time to go through the sales process properly.  This ultimately can lead to accepting a low offer just to get rid of the home.  It is important to take all these factors into account when assessing your future housing options.

If you alter your view on financial planning as a coaching family, you can more easily address the financial issues that you face.  Understand that your current location is temporary, your income and job is ‘rented,’ and you may not ever make as much money as you currently make.  By accepting the harsh reality of being a college coach, it will better prepare you to take advantage of the opportunities available to you.