Weekend Reading for the College Exec: November 2019 Edition

How fondly I recollect a conversation I just had with one of my clients, a President at a public university, about what vehicle they should purchase.

“Well, I can’t really buy a high end Mercedes, Mark.”
“Why not?”

“Because it wouldn’t look very good.”

“So what are you buying?”

“A Ford.”

College executives’ lives are scrutinized left, right, and center in every aspect. And it’s not like there’s a lack of reasons why you’re under the microscope. Look at what is transpiring on college campuses nowadays. There’s safety issues (mass shootings at Oikos University, UNC Charlotte, and unfortunately many others), tuition tensions, students ranting on Twitter about social issues. It’s a constant litany of emails, speeches, receptions. Not to mention the demands of fundraising (increasingly necessary due to decreased state funding) and balancing the budget.

Weekends? Got to check in at one of the school’s basketball games.

Job stability? Not what it used to be.

Emotional stability? Used up my last once of patience in the last meeting with the Board.

Admit it, you’ve considered throwing in the towel and retreating back to the classroom. Yet you manage to somehow put a bow on it and be the public face of the organization throughout it all, to serve in a way that inspires hope and positivity to its students, faculty, and donor community.

Financial effects

Invariably what happens is that college executives spend so much time worrying about these social and political issues that they neglect their own personal planning. Although college execs tend to be knowledgeable and well-educated individuals, it doesn’t necessarily mean that they are super informed when it comes to their own personal finances.

The result?

Many of these execs are contributing way too much to their qualified plans on a pretax basis. While this may seem innocuous for the time being, when it’s time to withdraw the funds upon retirement this can create an enormous tax bill. The key is do not contribute too much.

Invariably the question I get, about a year before the exec is about to retire, is “Well, how do I avoid this problem.” You’d have to invent a time machine and go back ten years. By the time you are 67 and planning to retire and start your RMD’s, the die is already cast.

I think college executives deserve better. You are the noble souls entrusted with care of the future of our society, and you rise to the occasion. It’s understandable why it could be so, but you’re talking about what is the equivalent of straight D’s on your financial report card! What would you say to a student who neglects his or her studies – be careful or you may not graduate, invest time now to make a better future. You are told to contribute but do not contribute too much,

So I say the same to you.

What does this create for your future later on when you graduate into retirement?

Getting to the A+

In the past, the options available to the college executive were limited mostly to annuities and whatever was on your school’s 403b menu. Whether or not this is the case in your personal situation, there may be other creative options to consider. It’s worthy of a conversation. Let’s talk about your questions and get you scoring an A on your retirement report card.

Please contact me here and I would be very honored to speak with you.


This information is not intended to be a substitute for specific individualized tax or legal advice. We suggest that you discuss your specific situation with a qualified tax or legal advisor.