- May 17, 2024
- Posted by: legaleseblogger
- Category: Related News
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## Planning Ahead for Children’s Education
Planning for your children’s education is a crucial aspect of financial planning. With the rising costs of college education, it is essential to start saving and investing early to ensure you are prepared for their future educational expenses.
### Investing in 529 Accounts
Two years ago, we started putting money into our children’s 529 accounts to save for their college education. However, with the uncertainty surrounding the future costs of college education, it is important to consider other investment options that can help secure their educational future.
### Alternative Investment Options
Parents are increasingly exploring various investment options to fund their children’s education apart from 529 accounts. Some alternatives include setting up custodial accounts, investing in Mutual Funds, or even considering Educational IRAs. These options provide flexibility and potential for higher returns compared to traditional savings accounts.
### Importance of Early Investing
For parents with younger children, starting to invest in a 529 account as early as possible can make a significant difference in accumulating funds for their future educational needs. The power of compounding can work in your favor, allowing your investments to grow over time and potentially cover a significant portion of their college expenses.
## How AI Legalese Decoder Can Help
AI Legalese Decoder can assist parents in understanding the complex legal jargon and terms associated with different investment options for children’s education. By decoding and simplifying the language used in investment documents, parents can make more informed decisions about where to put their money for their children’s future. This tool can help streamline the investment process and ensure that parents are equipped with the necessary knowledge to secure their children’s educational future.
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529 plus good grades in high school and going to an in state uni are your best bets.
They also changed the rules to allow 529 to Roth rollover. If your kid does gets a free ride then they can have 40k at 18. Roth after 40 years is around a 500k.
https://www.fidelity.com/learning-center/personal-finance/529-rollover-to-roth
We started late with our 11 year old because we were low income when she was small. We plan on having her do 2 years at our community College (for free) and then transfer to a state uni ($12,000 a year). By then we’ll have saved about $25,000 in her 529. She’ll live at home and we’ll pay for her textbooks.
Ugh, thanks for the reminder. I told my wife I’d roll my fun investment money account into my infant sons 529.
I opened 529s for each of them at age 2
Not sure if it’s available where you reside but look into college credit classes at your kids high school. Our district offers them and kids that qualify can basically get their freshman year of college done while still in high school (30ish credits). The best part is they take the courses at high school and don’t even have to leave. A lot of districts keep these programs quiet…I’m assuming they lose funding on the deal. Definitely worth looking into.
Also a tip as your kids get closer to HS. Take AP classes and dual credit courses. I went to a HS that pushed AP classes, my college didn’t accept a bunch of my credits, and I still ended up transferring 32 credits. Covered a lot of my math and gen Ed requirements and a few other courses. Saved me a full year of college.
My sibling managed to scrape up over 50 AP credits towards an engineering degree at one of the best undergrad programs in the country. Graduated even earlier than I did. Dual credit courses are even easier to earn credit for.
We started putting money into Coverdell as 529 did not exist yet. 529s now
The prepaid one. Amazing deal actually. We used to live in Michigan, there is called MET.
You pay at today’s prices, they guarantee to cover the kids in 18 years.
We were young and poor when we first got it so we only signed up for like I think a 2-year community college one. Or plain “2 years at average cost” or something. Which was crazy: All our kids ended up going to very high end expensive private colleges.
But that’s okay because they just pay it out in cash and a check instead. And that check has been way more than what we originally invested. So it’s still works even if your plans change.
Oh and they price it within your state– they kind of expect and want you to go in state colleges.
but if your kids end up going out of state, all of mine did, they just give you the cash equivalent.
I guess this is a lesson because we planned for a lot less motivated and academically gifted kids than we ended up with. We both went to state school, we both went and stay where we grew up. We thought that’s what our kids would end up in. And that wasn’t the case at all.
So a program that is flexible is key.
529 is probably the most tax efficient account / option.
You can’t really chase returns, not sure what the answer would be here if that is the question.
I have a 12 and 7 year old so very similar age. I opened 529 for them when their SS cards arrived in the mail after birth. At that time all we could afford was $25 a month as money was very tight, but as time went on and I moved to better and better jobs we increased it. Now the 12 year old has $44k and 7 year old has $30k. START EARLY even with a tiny amount a month and as your income grows add more to that monthly savings.
Between college and daycare,.money is the reason we stopped at one child.
I opened the 529 as soon as I got past that second trimester scan. We started at $50 a month and increased it a little bit each year. We are now at $300 a month for a 5 year old. And even that isn’t enough to cover a state school when they are 18 (Pa- very expensive state schools).
We are both pension employees, so assuming we get our pensions as promised, we will use some of the Roth money we set a side to fill the gaps.
I’ve got 4 young kids, im ready to throw like 25 bucks a month in each account for 20 years or so. But these 529s aren’t easy to open. I wish I could open them as easy as an investment account on my chase bank app but they don’t have that option. Also, other places want a big amount down to start.
Is the tax savings really that big of an advantage? Im wondering if I should just open 4 individual investment accounts and throw the money at VTSAX like my Roth.
So much restrictions for a 529. I just put money into a brokage account and will give it to him when he is older IF he isn’t an asshole.
We put everything in their 529 until it was fully funded for 4 years at a public university. After that we have a separate account in case we need additional funding for a private school or extra years. There’s no reason to lose the benefits of a 529 unless you’ve maxed out what you want to contribute to their college. We had the 529s set up before they were born and they were fully funded way before I thought it would take. Compound interest is on your side. Even a little bit earlier makes a huge difference.
There is the Upromise credit card All purchases get 1%, some get more. If you shop online through their website, many stores offer a % back on your purchase. Monthly the money generated through that is put in your 529. I’ve gotten close to 10K extra just through the credit card and shopping link.
We had a 529 and transitioning it to an ABLE. In the next few years, we’ll have to transition his UTMA into a special needs trust. At this point, he’s 14, and is on our insurance, but once he moves into adulthood, there are considerations to take into account for Medicaid rules.
There’s plenty of cash if he wants to get a certificate, but I doubt full college is in the cards.