Let’s cut to the chase: Do you have a financial plan for now and the future? Keith Smith, a certified financial planner, is guessing you probably don’t. In fact, Smith says probably fewer than 30 percent of golf course superintendents are saving for the future and their retirement, which is less than the national average.
“The biggest reason they don’t have plans is because being a superintendent isn’t a job, it’s a lifestyle,” Smith says. “It envelopes your whole life – from dawn until dusk.”
Smith should know. He’s a former superintendent who loved growing grass, but decided to duck it for something less stressful and time consuming – and more lucrative. The 42-year-old Smith quit the golf course business 10 years ago to study to become a certified financial planner. He is now a vice president and financial advisor for Morgan Stanley in Hudson, Ohio.
Smith, who holds a turf degree from Rutgers University, was a public golf guy. He worked as a superintendent for six years, his last stop being Eagle Creek Golf Club in Norwalk, Ohio.
Maybe you’ve heard of Smith or seen him speak about financial planning at past industry events. He’s a sharp individual and wants to help superintendents with their finances. I spoke to Smith recently about superintendents and how they should plan for their financial futures if they already haven’t.
Unfortunately, according to Smith, most superintendents haven’t composed a financial plan for the future and may be working to make ends meet when they should be retired. That said, supers aren’t alone in this conundrum – most Americans don’t have financial plans, he says.
Superintendents must realize that the term “financial future” doesn’t necessarily mean 25 or 40 years from now. It’s also about next week and next month, Smith says.
“From a plan perspective, it’s not just about how much you can save for retirement,” Smith says. “It’s about both sides of the balance sheet. You have to look at both sides to make it work.”
Having a 401(k) and a financial plan are completely separate, Smith stresses. “A 401(k) is only one portion of a financial plan,” he adds.
Other portions include managing your debt and mortgage. Regarding home ownership, Smith points out that interest rates remain historically low, which makes it a great time to invest in a home. And if you already own a home, it’s a great time to refinance.
“We are probably in a window, where opportunistically it’s the lowest interest environment we may ever see in our lifetime,” Smith says.
The Federal Reserve’s interest rate remains at 0, which means it only has one way to go. And it will, eventually.
But get this: Smith says half the people he advises don’t know the interest rate on their homes. They also don’t realize that if they are paying 6 percent now they could refinance to less than 4 percent today and save thousands of dollars over the next 30 years. Hate to say it, but this includes a lot of superintendents, who are so wrapped up in their jobs that they aren’t even thinking about stuff like this, Smith notes.
With interest rates so low, superintendents who are homeowners with a 30-year mortgage may want to consider refinancing to 15-year plans if they can afford the payments, Smith notes. If they can’t do that, there are other ways to pay off your home faster and save interest money in the process. For instance, some superintendents might be able to make bi-weekly payments on their mortgages, which would be splitting the total payment and making it twice a month. This would allow more money to paid on the principal, which would take up to five years off a mortgage, not to mention thousands of dollars in interest.
But be careful with a mortgage, Smith says. Don’t use the equity in your home as a bank.
Smith offers this scenario: Say you’re a superintendent who is 40 years old with a wife and two kids. You have a 401(k) plan and a home. You’ve had the home for 15 years and have 15 more years to go on the 30-year mortgage. Your two kids are nearing college, and you’re wondering how the heck you’re going to pay for it. So you refinance your home and cash out for your kids to go to college. Good financial move or bad?
“That’s probably not the greatest thing in the world because now you just stretched your mortgage rate out another 30 years,” Smith says. “So the reality is if you had a plan in place, you wouldn’t be using the wrong asset to pay for the wrong thing.”
The thinking process
How soon should you start thinking about starting a retirement plan? How about the day after you graduate from college, Smith says.
OK, but what if recent college graduates, even though they have entry-level jobs, have to pay off student loans, Smith is asked. Should they shelf retirement for a while?
No way, Smith says. You have to get started early.
“Even if it’s just $50 a month … it will help you,” he says. “You just have to have a vested interest in making a plan succeed.”
But what if you have never been a saver, how can you get yourself in the mental mode to save? Smith doesn’t sugarcoat the answer.
“It’s a seed change,” Smith says. “It’s hard to do.”
The good thing about superintendents is that they are usually very frugal people, Smith says. That comes with managing a course’s budget.
“[Superintendents] tend to be very good managing the course’s dollar because they have to be,” Smith says.
Many of them are also accustomed to getting things done on low and lower budgets, considering costs are going up and maintenance budgets are staying the same or getting trimmed every year. What this translates to in their personal lives is that many superintendents have little to no debt at retirement, Smith says. That said, a lot of them don’t have much saved, either, he adds.
About that 401(k)
There’s good news as far as retirement programs go: More courses are offering 401(k) plans these days, compared to only a handful a few years ago, Smith says. That’s because the costs associated with implementing 401(k) plans have been reduced.
But there’s bad news about this, too, Smith says. Many superintendents are maxing out their 401(k) plans, but not saving much of anything else. They must remember that they can’t touch that money until they’re 59.5 years old.
For all the superintendents who don’t have a 401(k) – and there are plenty of them – it’s on them to devise a plan to save for retirement. If you’re in your 30s, it’s past time to do something about this, Smith says. You might be able to invest on your own with marginal success. But to put a financial plan together on your own can be a rigorous process, Smith notes.
Superintendents also have to consider how much money they will get in Social Security. Again, many of them – and people in general – have no idea, Smith says.
“If you’re 55 or older and Social Security doesn’t go away and you have a little bit saved, you can make it,” Smith says. But the retirement you lead may not be as comfortable as you’d like it to be, he adds.
For all the superintendents out there who are wondering what to do to get it together when it comes to your finances – and you’re not alone in your profession – Smith advises you to seek help. He’s not asking you to contact him (although he would happily accept your call), but to find someone to help you with a financial plan.
There are a lot of financial planners out there. Google them in your area and set up a few visits where you can talk to and get a feel for them. Then choose a person you are comfortable with.
You might want to consider a certified financial planner like Smith. These people are beyond the knowledge of “financial planners,” a title of which many people can lay claim. A certified financial planner has taken a few years of classes and tests – and a two-day test that may be equivalent to a bar exam – to achieve his or her status. Call them the cream of the crop of financial planners.
Again, it can be intimidating to speak to a financial planner, considering you’re talking to someone about your money and how you spend it. But if you want to get your finances in order and plan for your future, then you contact one, Smith says.
Speaking of the future, Smith says he often runs into two types of 65-year-old clients – those who have saved a lot of money and have plenty of assets but still owe on their mortgage, and those who don’t have as much saved but have paid off their mortgages.
“You have the rare few who have saved a lot and paid off their homes, but most of our clients fit into one of those two categories,” Smith says. “But if you don’t have that much saved and still have a mortgage payment … those are the people it’s going to be tough for.”
Makes you wonder how many superintendents fall into that category.
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