Summer Financial Planning for University Professors
Summer can provide a welcome break from teaching responsibilities, giving university professors more time to focus on research or spend with family. These upcoming months are also a great time to revisit your financial plan. Used thoughtfully, summer may present an opportunity to revisit certain aspects of your financial plan. Below are some key action items to consider as we approach the summer months.
Revisit Your Tax Plan:
By now, last year’s tax returns are likely completed. With recent tax law changes, you may have had a surprise tax bill or a refund when you completed your return. Take some time to review your tax returns with your accountant or financial advisor to determine what needs to be addressed. Work with your HR department if any adjustments need to be made to your federal and state tax withholdings from your paycheck. You can also make estimated quarterly tax payments to cover any gaps not met by your current withholdings to help avoid potential tax penalties.
A new provision from SECURE Act 2.0, scheduled to take effect in 2026, may affect your taxable income. The new rule states that workers over 50 who earned more than $150,000 in gross FICA income may be required to make any catch-up contributions as Roth contributions. This means you will pay tax on that income now rather than defer taxes on prior pre-tax contributions. This rule is only mandatory for catch-up contributions of up to $8,000 in 2026, but should be factored into your overall tax planning for the year.
Toward the end of the calendar year, life can get hectic as you wrap up the fall semester and start the holiday season. Having a plan in place to make charitable gifts can help alleviate any additional stress. Here are some key items to consider:
- How much do I want to give?
- Which organizations do I want to support?
- What strategy and assets should I use to make the gifts, such as qualified charitable contributions (QCDs) or donor advised funds (DAFs)?
Starting in 2026, current legislation provides that individuals may be permitted to deduct up to $1,000 ($2,000 for married couples filing jointly) of certain cash gifts to charities, even if they don’t itemize. With that in mind, it’s helpful to keep clear records of any cash or check gifts you make throughout the year, as you may qualify for a modest tax benefit that wasn’t previously available.
Review Retirement Plan Contributions and Investment Allocation:
The maximum contribution allowed in your employer retirement plans generally increases each year. For instance, the maximum contribution for a 403(b) plan in 2025 was $31,000 for most people over 50. The new maximum for the same individuals in 2026 is $32,500. If you want to contribute the maximum each year, review your current contributions to be sure they reflect any annual increases.
For professors earning consulting income throughout the year, a SEP IRA can be an effective way to potentially turn supplemental income into tax-advantaged retirement savings, although eligibility, contribution limits, and tax treatment will vary. Contributions are based on your consulting income and can be made on a pre-tax basis, giving them the potential for tax-deferred growth.
Take a moment to review your bank account balances. If you’re already contributing the maximum to your employer-sponsored retirement plans and your cash continues to grow, you may want to consider opening an after-tax brokerage account.
Contributions to this type of account are made with after-tax dollars, and any investment growth held for more than a year may qualify for more favorable capital gains tax rates. You can also set up an automatic transfer from your bank account to help maintain consistent contributions.
Regularly reviewing your investment allocation helps ensure your portfolio stays aligned with your targets. Over time, market movements can cause the allocation to drift. Because stocks have outperformed bonds so far this year, your portfolio may be overweight in equities, which may result in a portfolio that differs from your intended allocation and could warrant a review based on your long-term strategy and tax considerations.
Schedule A Family Finance Discussion:
Summer often creates more opportunities for families to spend time together. It can also provide a good opportunity to talk about your finances. Setting aside time for these conversations can help provide clarity for the next generation and address their questions or concerns.
Start by reviewing your estate plan with your family to help ensure everyone understands their roles and is comfortable serving in them.
Below are some helpful questions to guide the conversation.
- Who are your helpers (executor / trustee / powers of attorney) and are they comfortable in those roles?
- Who should they contact (attorney / financial advisor) when something happens to you?
- Where are your estate documents located?
- Where are your assets located?
- Where are your online account passwords?
It’s also helpful to clearly communicate your end-of-life healthcare preferences with your family to ease the burden of making difficult decisions during an emotional time.
Conclusion
Summer creates a natural opportunity to pause, reflect, and reset. By revisiting your tax plan, planning charitable giving, involving your family in meaningful conversations, and reviewing key areas of your financial life, you may be better positioned to approach the second half of the year with greater clarity. Financial planning is most effective when it stays intentional and consistent. A thoughtful midyear review may help keep your plan aligned with your goals over time.
This is intended for informational purposes only. You should not assume that any discussion or information contained in this document serves as the receipt of, or as a substitute for, personalized investment or tax advice from Savant. Please consult your investment or tax professional regarding your unique situation.
Zachary D. Meulemans
Financial Advisor
CFP®, ChFC®