With wise planning, you can set your children and yourself up for success.
You want your kids to have a successful start to their careers.
However, you also want to be able to end yours eventually.
Can you do both?
According to a recent CNBC article titled “Saving for college and for retirement isn’t impossible,” saving early is key.
Let us consider a hypothetical situation.
If you currently have a newborn, sending this child to private university for four years will cost $455,585.
That is a ton of money.
The cost of public university?
How might parents who are both 28 years old save for the education of their newborn child?
When they started working at age 22, the couple began adding to their 401(k)s at 15 percent of their total income—a 12 percent deferral rate and 3 percent company match.
When baby number two is born, the contributions decrease to 9.4 percent.
After the first child goes to college, retirement savings can be increased to 12.2 percent.
When the second child enters university, savings can go back to 15 percent until the couple retires at age 65.
Another good way to help with college?
Individually a grandparent can contribute up to $70,000 to a 529 plan—or $140,000 as a couple.
Doing this will help their grandchildren go to school, will enable their children to retire and will be beneficial to their own estate plan with tax-free gifts.
To accomplish these goals, it is best to work with a qualified financial advisor and an experienced estate planning attorney.
Remember: “An ounce of prevention is worth a pound of cure.” When making your financial, tax and estate plans, do not go it alone. Be sure to engage competent professional counsel.
For more information about estate planning in Overland Park, KS (and throughout the rest of Kansas and Missouri), visit our estate planning website and be sure to subscribe to our complimentary estate planning e-newsletter while you are there.
Reference: CNBC (November 7, 2016) “Saving for college and for retirement isn’t impossible”