Financial Planning After Promotion

College Coaches: Financial Planning After A Promotion

With the beginning of preseason camp (hopefully) around the corner, there is no better time to make sure your financial affairs and budgets are in good order. If nothing else, the pandemic and sudden halt to life as we knew it have taught us to expect the unexpected in all phases of our lives.

Based on the most recent data compiled by USA Today in their annual survey of salaries for NCAA football coaches, the salary of the highest paid head coach has increased by 30 percent over the past five years while the salary of the highest paid assistant coach rose by an astounding 84 percent over the same time frame. In fact, more than 20 assistant coaches across the country made over $1 million in 2019 (1), and it is no secret that a big pay raise follows a promotion from a position coach to coordinator or a phone call to run your own program in most cases.

So, what next?  How do you make the most of your newly found riches for yourself and possibly other generations?

There is nothing wrong with changing your lifestyle, buying a bigger home, driving a nicer or newer car, or taking the family on a nice vacation after getting an improved contract, but budgeting for those items and other – perhaps less immediately-gratifying – items is vitally important.  Here are some action steps that make a big difference towards the success of your long-term financial plan.

1. Evaluate Old Retirement Plans

When moving from one job to another, it is important to make the most of the existing retirement funds that you worked so hard to accumulate up to this point in your career. You may consider working with a financial advisor to find a best-in-class lineup of funds that fits your specific needs.

2. Save More in School-Sponsored Retirement Plans (2)

Contrary to popular belief, “maxing out” your school-sponsored 403(b) plan does not stop at the percentage by which your school matches your contribution. Some retirement savers don’t realize that the IRS allows you to defer up to $19,500 (or $26,000 if older than 50 years old) in 2020 regardless of your school’s contribution or matching schedule.  If you wish to save more in a tax-deferred retirement fund, you may also consider saving an additional $19,500 (or $26,000 if older than 50 years old) in a 457(b) plan if your school offers that option.

3. Make Additional Investments

For some coaches making “Power 5” money, you may have the desire and ability to build wealth outside of the school’s 403(b) and 457(b) plans.  These investments may include portfolios of stocks, bonds, mutual funds, and annuities.  But you can also build wealth by investing in real estate and other business ventures that may generate additional retirement income when your coaching days have passed.

4. Retirement Income And Family Protection

The use of life insurance has recently become popular as some schools include it in a coach’s benefits package.  There are a number of insurance products in the marketplace with varied features to help protect you and your family that you may consider looking into.

5. Build Up Your Emergency Fund

While you don’t take a job with one foot already out of the door, the reality of the industry is that all coaches move and some move quite often.  At the least, it is important to build up an amount equal to the cost of a move and also 6-12 months of modest living expenses in an emergency fund.  Unfortunately, the reason for these moves is sometimes out of your control.  With the stakes so high, you may only be one bad season or recruiting class away from a job change in some cases.

Action Steps

If you have not taken the time to assess how you are trending toward the retirement that you and your family dream about or to determine if you are invested properly, we highly suggest that you do so sooner rather than later.  Then, you will know what trajectory you are on and what adjustments need to made.  You may need to play catch-up or you may find out that you are on the right path.  Regardless, much like preparing for your next on-field opponent, being as prepared as possible for any opportunity or obstacle will only improve your chance at success.

We hope this article finds you and your families safe and healthy as we are all living through unforeseen and unprecedented circumstances.

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About the authors:

Matt Kuerzi and Keith Norris

Keith Norris, First Vice President and Financial Advisor, and Matt Kuerzi, Vice President and Financial Advisor, are co-founders of The Derby City Group at Morgan Stanley in Louisville, Kentucky.  They have a combined 40 years of experience helping families with their financial planning (3).  In 2019, Matt was recognized by Forbes in their first ever list of “Best-In-State Next-Gen Advisors”.  He can be reached directly at (502) 394-4094 or matt.kuerzi@morganstanley.com.

Branch address: 4969 U.S. Highway 42, Suite 1200, Louisville, KY 40222

(1) https://sports.usatoday.com/ncaa/salaries/football/coach
(2) https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-contributions
(3) Keith Norris, First Vice President, Financial Advisor, experienced in the financial services industry since 1997.  Matt Kuerzi, Vice President, Financial Advisor, experienced in the financial services industry since 2002. 

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