Juggling Retirement And College Savings
Keywords: Retirement, retirement planning, saving for college, college funding, financial planning
Most parents want to pay for their childrens college education, or at the very least help pay for college. While it would be great for your children to be able to start like after college without student loans to pay off, the cost to parents may be too high.
The average annual cost of a 4-year public college is $12,127 (source: The College Boards Annual Survey of Colleges, 2005-2006), with 4-year private schools averaging $29,026 a year. College costs have been outpacing inflation by rising over 5% per year.
On the other hand, saving for retirement has become even more important as companies have started freezing or eliminating pension plans, and the future of Social Security continues to be uncertain.
Paying for both college and retirement will be challenging for most parents. Here are some suggestions to help you to achieve both goals:
Have a plan. You should determine how much you will need for retirement and how much you anticipate your children will need for college.
Start saving as soon as possible. Time is your greatest ally, whatever your savings goal. Figure out how much you are able to save each month, and setup an automatic plan as soon as possible.
Prioritize if you cant afford to save for both goals, retirement should take priority over saving for college. Your children can always borrow for college or earn scholarships; you can not borrow money for retirement.
Save for both. Ideally, youd like to be able to save for both goals at the same time. If youre able to, allocate money to both goals. You may wish to visit with a financial planner to determine how much should be allocated to each goal.
Research there are several different types of college savings accounts available. Find out which type of account will benefit you the most before you invest.
Use retirement accounts to save for retirement and college. Retirement accounts can be tapped into to help pay college bills (IRA withdrawals can be taken penalty free for college expenses; Roth IRA contributions can be taken penalty and tax-free). However, you should only do this if it will not sacrifice your retirement savings.
The bottom line to getting the most out of your savings – prioritize your savings goals, have a plan in place, and start early.
Kristine A. McKinley, CFP, CPA, and founder of Beacon Financial Advisors, offers financial and tax planning on an hourly, fee-only basis.
To sign up for free financial planning tips, worksheets, checklists and more, visit www.beacon-advisor.com.
Previous Articles Highlighter:
401K Or Roth IRA - Which Is Better? (1)
Because withdrawals from a 401K account are taxed at your ordinary income tax rate, withdrawals could potentially push you into a higher tax bracket. If you have a combination of 401K and Roth IRA accounts, you have greater flexibility in choosing which account to withdraw from, which could allow for tax planning opportunities to help minimize your taxes during your retirement years.
Cash Flow Planning For Solo Professionals (2)
So, you should track both your personal and your business spending, although I recommend that you keep them separate (thats a topic all by itself). Whats the best way to track your spending?
Top 5 Missed Tax Deductions (3)
Investment and Tax Expenses Expenses for tax planning and investment advice are deductible as a miscellaneous deduction, subject to the 2% Adjusted Gross Income (AGI) limitation. Expenses that qualify include tax preparation fees, safe deposit box fees, fees paid to investment advisors, legal and accounting fees related to tax planning, broker and IRA fees paid directly, investment publications, and more.
You Know It, You Love It -- Write About It! (4)
Last, give it a read-through and spell-check and you're done! Then you can submit said article via your favorite article submission service and you'll be well on your way to fame and fortune.
5 Ways To Make Money Online (5)
When you become an affiliate, you will be given a unique link with a tracking code. In your advertising, you will send people to that link. This unique code will ensure that all the sales will be properly credited to you.
What Are The Benefits Of Drinking Espresso (6)
In a recent study carried out it was found that men who drank 4 to 5 cups of coffee each day cut their risk of developing Parkinson's disease by nearly half compared to those who consumed little or no coffee each day.
Graphic Designing ... How Do I Do It? (7)
I quickly began to realise that it was not all that hard. I also discovered (after some time) that Pixel2Life had its very own forum where Photoshop beginners could ask experts any problems or queries they may have had, this was a very powerful tool and quickly transformed me from a beginner to an intermediate!
What You Need To Do To Become A Navy Officer (8)
Is this for real or just blowing smoke at me? Also, I have a degree and was looking into reserve officer, but he said to join enlisted reserve first and work my way into it once I am in." "I can't give you first hand experience but I too am real close to submitting my package for supply corps officer (DCO).
Finding A Good Writer To Make Money With Articles (9)
So although $30 or more for a 500 word article may seem like a lot, when you think about the service they are providing you and the time and effort that they put into your piece, then you will realize that it really is not a lot for that one article.
Article Submission Software And Article Marketing (10)
FreelancerGlobe.com , Elance and Scriptlance are excellent places to start your search for a writer. FreelancerGlobe.com is a new service and is free, so i would start there. 6.
Newer Articles Highlighter:
Five Steps To A Comfortable Retirement - Without Winning The Lottery! (1)
Studies show that your investment return is determined primarily by the allocation of your assets, not the individual investment selections you make. 5. Keep your costs down. Invest in no-load, low cost mutual funds (or other investments).
Retirement Plans For Solo Entrepreneurs (2)
Similar to a SEP IRA, contributions max out at $44,000. However, unlike a SEP IRA, participants in a Solo-401K can contribute up to 100% of the first $15,000 of compensation or self-employment income, and an additional amount up to 25% of your compensation.
Understanding The Techniques Professionals Used To Achieve Great Digital Photography (3)
Believe it or not, motion also plays a factor in a shot. This is because it can disrupt the viewer's attention away from the model instead of the subject taken.
Basic Facts About Children And Dieting (4)
Watch Out for Caffeine. Many adults are addicted to the caffeine rush that comes with drinking coffee, but what parents do not realize is that soda can have the same effect on children.
The Imperfection Of Perfect Credit Behavior (5)
It may go against the grain, but occasionally using your credit cards instead of cash, checks or debit cards can help. Just pay them off promptly so that you aren't having to pay high interest rates.
2007 Honda CR-V Review (6)
The CR-V 2007 is slightly wider and lower than its predecessor, which gives it an extra touch of stability in turns, and also shorter, mainly because the spare wheel is no longer attached to the back, as in the previous two generations.
Stay Organized With A Garage Storage System (7)
If your garage is prone to attract water on the floor, your base cabinet should be raised higher than the worst flooding you can expect. Additionally, nothing that can be destroyed by water should be stored near the ground.
The Convenience Of The Digital Audio Book (8)
What Makes Digital Audio Books Better Usually audio books come on CDs and you will require a CD player in order to play them however, digital audio books can be downloaded on your ipod or MP3 player, which takes even lesser space than a CD player and can hold the whole book without you having to change the CDs when they are over to the next one.
Planning Your New Business: Feasibility Analysis Part Three (9)
Before the world started to swirl around electronic media like television, radio, and especially the internet, the one standard for communication was the written word. While it is true that much electronic media has replaced some of the value of written media, it is still the most affordable and easiest way for you to get the word out about your business to a massive audience quickly.
What's Going On In Your Workplace Online? (10)
They may be forwarding jokes or receiving in Spam that can plague your network with unnecessary tasks. Opening the network to staff members may also create serious holes in your security and allow spammers and hackers direct access into your network.