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Coaches of All Ages Should Look to Create a Retirement Plan -Part 1

Coach Jere Adcock of Decatur called it a career after the 2022 season. Adcock, 67, spent 43 years in coaching. He spent the last 27 as head coach at Decatur High School.

Every coach had had those days or even seasons where you come home, sit down and say to yourself "I don't know how much longer I can do this." Long hours and continued problems can create stress that can diminish your enthusiasm for your job as well as your health. For many coaches in their 20s, 30s and even 40s, the thought of retirement is far down the road. However, decisions that you make now can can have an effect on your money that you will receive in your retirement years.

Here are a few basic suggestions that hopefully will get you thinking and keep you on the right track to your retirement years.

1) Understand how the retirement system of Alabama works. Here are some of the basic concepts. You pay in from your check each month as does your employer. When calculating your retirement benefit, you get credit for approximately 2% for each year you worked. After 25 years of work, you can retire at 50% of your salary (25 years @ 2%). Every year you work after that, you would an additional 2%. After 27 years, you could get 54%, after 30 years, you could get 60%, after 38 years you would receive 76% etc. Your salary figure is based on the average number of your best 3 years out of the last 10 years you worked. For most people, that would be the last 3 years. If that average was $60,000, then you could retire at 50% of $60,000 or at $30,000 after 25 years. If that average was $60,000 and you had worked 30 years, you would get 60% of $60,000 or $36,000. So the greater your salary and the longer you work, the greater your retirement benefit. if your benefit was $36,000, you would get $3,000 monthly. Coaches can earn as much money as they wish outside of the Alabama state retirement system. If coaches work a state job, there is a limit on how much they can earn and still draw their retirement. You will receive these retirement benefits for the rest of your life.

2) Increasing your salary in your later years could significantly change your monthly retirement check. Getting a master's or AA degree increases your salary which increases your retirement benefit. Taking a better paying job in your last few years before retirement can mean a nice bump in your monthly check. If you do 30 years at $60,000, this would be a benefit of $36,000 or $3,000 per month. If that coach takes another job that pays $80,000 for at least three years, this would increase his retirement check significantly-60% of $80,000 would be $48.000 or $4,000 per month. This is why you will often see coaches who have been successful at smaller schools take a bigger school job to increase his pay as he approaches retirement age.

3) Coach in the state of Alabama in public schools to get credit for each year you coach. If you leave Alabama and take a job in Florida for five years, the only way to get credit for those years would be to "buy" them back when you get ready to retire. The state retirement system has a formula to determine the cost. it can be very expensive. Coaches who have years in private schools whether in state or out, are not allowed to use those years toward retirement. If coaches leave to coach in a private school, they should understand that they will not get service credit for those years.

4) Understand that there is no state tax on retirement benefits in Alabama. Coaches will have to pay federal taxes on their Alabama retirement checks but not state tax. There are coaches from nearby states that retire and move their residence to Alabama so that they will not have to pay state taxes.

5) Have some general understanding of how your Social security works. Each month you work, you and your employer both pay social security taxes. At age 62, you are eligible to receiver benefits. The amount you receive is based on a formula that is determined by the best average salary of 35 years of work and when you start to receive benefits. If you wait until full retirement age (now 66 years+) you will receive a larger check than if you start receiving money at 62 years of age. Waiting until age 70 would increase it by even more. Before you reach full retirement age (66+), there is a cap of $21,240 on your earnings. That means you can still work and draw a salary but if you earn over the cap limit, you will lose some or all of your social security benefits. Once you reach full retirement age, you can work and earn as much money as you wish to earn. You will receive these benefits for the rest of your life.

6) Find a way to put money in a RSA-1 account. It can be difficult with children and the cost of living, but teachers and coaches have a great opportunity by establishing a RSA-1 account with the state. This allows coaches to take money before it is taxed and put it into an account that can earn interest through the years. The state does a great job investing these moneys and coaches have options as to how they want their money to work for them. Over the course of 30 years, even a small amount that is invested each month can turn into something bigger than expected to give coaches some extra money in their retirement years.

Part 2: How coaches make extra money in their later years


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