What’s “your number” for each kid’s 529?

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geerhardusvos
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Re: What’s “your number” for each kid’s 529?

Post by geerhardusvos »

pepperz wrote: Wed Oct 28, 2020 9:09 am Do you have a goal amount for kids 529 that you’re proactively working towards?

My kids are 3 and 1.5 years old and trying to work out my philosophy here.
$0.00

I paid for all my university, and so can they. Heck, they might not even go to a traditional university. Grandparents and scholarships may come through, but my kids need to own it.
VTSAX and chill
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Harry Livermore
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Re: What’s “your number” for each kid’s 529?

Post by Harry Livermore »

Leesbro63 wrote: Wed Dec 09, 2020 10:13 am
ccf wrote: Wed Dec 09, 2020 8:47 am $115K per child in today's dollars

(roughly 4 years of in state tuition+room+board at today's prices)
I think this is a great rule of thumb, for upper middle class Americans. Save enough for a traditional 4 years (including dorms and dining hall) at flagship state universities.
That certainly was our goal!
Cheers
donaldc
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Re: What’s “your number” for each kid’s 529?

Post by donaldc »

My son went to small liberal arts school which cost $300k. We saved $50k in 529. His present school is $400k + $100k for 4 year dual degree. Fortunately he got a full scholarship for the $100k. We pay $100k per year from cash flow. Total cost $800k (post high school only).
Daughter has $130k 529. Entire amount covers her California public college. Nothing left.

If family income <$120k/yr then many school will give financial aid/grants. You needn’t save much.

Even if tuition is free, housing and food is $20k per year.

Below demonstrates education inflation
USC dental first year (just one year)
2012: $114k (4% increase)
2013: $123k (8%)
2014: $127k (3%)
2015: $130k (2%)
2016: $134k (3%)
2017: $137k (2%)
2018: $140k (2%)
2019: $149k (6%)
We're wolves
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Re: What’s “your number” for each kid’s 529?

Post by We're wolves »

donaldc wrote: Wed Dec 09, 2020 4:12 pm My son went to small liberal arts school which cost $300k. We saved $50k in 529. His present school is $400k + $100k for 4 year dual degree. Fortunately he got a full scholarship for the $100k. We pay $100k per year from cash flow. Total cost $800k (post high school only).
Whoa! I'm confused though, this includes graduate school correct? Still an enormous number...
WhiteMaxima
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Re: What’s “your number” for each kid’s 529?

Post by WhiteMaxima »

$222K for two kids. 529 is a good vehicle for estate planning. people could save millions as a educational fund for future generation. Instead give them to by luxury vacation and lambergini sport car,
marcopolo
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Re: What’s “your number” for each kid’s 529?

Post by marcopolo »

BabaWawa wrote: Wed Dec 09, 2020 5:19 am
marcopolo wrote: Tue Nov 03, 2020 12:08 pm
KlangFool wrote: Tue Nov 03, 2020 8:06 am
marcopolo wrote: Mon Nov 02, 2020 7:01 pm I find it a bit odd that people love Roth accounts so much, and will go to such great lengths to get more money into them (Backdoor Roth, Mega Backdoor Roth, paying taxes upfront to do Roth Conversion), but then dislike 529 plans so much.

If used for college expenses, 529 plans are essentially a Roth account with very high contribution limits.
In some states, they are even better, as you can get a tax deduction as well.
The answer is obvious. Roth account can be used for any purpose. 529 can only be used for one purpose.

KlangFool
Imagine that, a tax break for education is only a tax break if used for education!
I agree, if you plan to spend it on other things, don't put it into a 529.
Best plans can change. Risk of overfunding does not seem worth it to me. Not willing to pay future tax rates and a 10% penalty on the earnings should I need it or use it for something other than education. Most Bogleheads will agree that your retirement savings should be top priority, so you shouldn't be surprised that Roths are more popular.

I planned based on an attempt to optimize for the most likely scenario.

Based on our family history of college attendance, it seemed there was a vert high probability that my kids would be going on to some type of post high school education. 529 plans can be used for vocational and trade schools as well.

Sure, there was a chance that they might not have gone. So, in that small likelihood case, I would have paid taxes and some penalties. But, that is weighed against the significantly higher probability that we would save many thousands of dollars in taxes. It was an easy choice.

Happens to have turned out that we were right.

We will have significant funds left over. No worries, we will pass down to next generation, and they will also benefit from years of tax-free growth
Once in a while you get shown the light, in the strangest of places if you look at it right.
marcopolo
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Re: What’s “your number” for each kid’s 529?

Post by marcopolo »

alfaspider wrote: Wed Dec 09, 2020 10:18 am
marcopolo wrote: Mon Nov 02, 2020 7:01 pm I find it a bit odd that people love Roth accounts so much, and will go to such great lengths to get more money into them (Backdoor Roth, Mega Backdoor Roth, paying taxes upfront to do Roth Conversion), but then dislike 529 plans so much.

If used for college expenses, 529 plans are essentially a Roth account with very high contribution limits.
In some states, they are even better, as you can get a tax deduction as well.
Compared to an IRA which you can allow to compound for 40 years, the benefit is not quite so great when your time horizon is limited. The 529 only has an 18 year maximum time horizon in most cases. The 529 works out to something like a 10% off coupon if you are sending a kid to an expensive private college, fund shortly after birth, and are in a high tax bracket. States with a state tax deduction sweeten the pot a little, though these deductions are typically pretty limited. A nice little perk, but not a game changer. Plus, there's more risk on the 529 because the IRA can be used for anything, while the 529 must be used for education, and there's a chance the beneficiary will not use the funds.
Yeah, we met most of your stipulations.

Life changing, no.
Saved 10s of thousands of dollars in taxes, yes.

Seems like a pretty good tool.
Once in a while you get shown the light, in the strangest of places if you look at it right.
donaldc
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Re: What’s “your number” for each kid’s 529?

Post by donaldc »

We're wolves wrote: Wed Dec 09, 2020 4:18 pm
donaldc wrote: Wed Dec 09, 2020 4:12 pm My son went to small liberal arts school which cost $300k. We saved $50k in 529. His present school is $400k + $100k for 4 year dual degree. Fortunately he got a full scholarship for the $100k. We pay $100k per year from cash flow. Total cost $800k (post high school only).
Whoa! I'm confused though, this includes graduate school correct? Still an enormous number...
Yes. 4 year joint MBA/MD degrees
stoptothink
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Re: What’s “your number” for each kid’s 529?

Post by stoptothink »

We're wolves wrote: Wed Dec 09, 2020 4:18 pm
donaldc wrote: Wed Dec 09, 2020 4:12 pm My son went to small liberal arts school which cost $300k. We saved $50k in 529. His present school is $400k + $100k for 4 year dual degree. Fortunately he got a full scholarship for the $100k. We pay $100k per year from cash flow. Total cost $800k (post high school only).
Whoa! I'm confused though, this includes graduate school correct? Still an enormous number...
Just so happens that their child CHOSE pretty much the most expensive possible options in the country. Glad they can afford it and feel like it provides value over much cheaper options.
manatee2005
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Re: What’s “your number” for each kid’s 529?

Post by manatee2005 »

stoptothink wrote: Wed Dec 09, 2020 5:38 pm
We're wolves wrote: Wed Dec 09, 2020 4:18 pm
donaldc wrote: Wed Dec 09, 2020 4:12 pm My son went to small liberal arts school which cost $300k. We saved $50k in 529. His present school is $400k + $100k for 4 year dual degree. Fortunately he got a full scholarship for the $100k. We pay $100k per year from cash flow. Total cost $800k (post high school only).
Whoa! I'm confused though, this includes graduate school correct? Still an enormous number...
Just so happens that their child CHOSE pretty much the most expensive possible options in the country. Glad they can afford it and feel like it provides value over much cheaper options.
It includes mba and md degree so yeah that’s expensive and not typical.
manatee2005
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Re: What’s “your number” for each kid’s 529?

Post by manatee2005 »

donaldc wrote: Wed Dec 09, 2020 4:57 pm
We're wolves wrote: Wed Dec 09, 2020 4:18 pm
donaldc wrote: Wed Dec 09, 2020 4:12 pm My son went to small liberal arts school which cost $300k. We saved $50k in 529. His present school is $400k + $100k for 4 year dual degree. Fortunately he got a full scholarship for the $100k. We pay $100k per year from cash flow. Total cost $800k (post high school only).
Whoa! I'm confused though, this includes graduate school correct? Still an enormous number...
Yes. 4 year joint MBA/MD degrees
Why get an MBA for a doctor right out of undergrad? MBA is useful only after you’ve had some work experience, and even then it’s not very useful.
EnjoyIt
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Re: What’s “your number” for each kid’s 529?

Post by EnjoyIt »

manatee2005 wrote: Wed Dec 09, 2020 6:09 pm
donaldc wrote: Wed Dec 09, 2020 4:57 pm
We're wolves wrote: Wed Dec 09, 2020 4:18 pm
donaldc wrote: Wed Dec 09, 2020 4:12 pm My son went to small liberal arts school which cost $300k. We saved $50k in 529. His present school is $400k + $100k for 4 year dual degree. Fortunately he got a full scholarship for the $100k. We pay $100k per year from cash flow. Total cost $800k (post high school only).
Whoa! I'm confused though, this includes graduate school correct? Still an enormous number...
Yes. 4 year joint MBA/MD degrees
Why get an MBA for a doctor right out of undergrad? MBA is useful only after you’ve had some work experience, and even then it’s not very useful.
Although you are correct. Getting it out of the way early has its benefits if one intends to use it. I know a handful of docs with MBAs who don’t take advantage of their degree.
A time to EVALUATE your jitters: | https://www.bogleheads.org/forum/viewtopic.php?f=10&t=79939&start=400#p5275418
FlamePoint
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Re: What’s “your number” for each kid’s 529?

Post by FlamePoint »

We saved $78k for each kid in a 529, which is approximately 75% of what it would cost at a 4 year in-state university. DD #1 took college courses at the local community college her senior year of high school, and is now taking her second year of electives at a different CC. She’ll transfer to a state University for her remaining 2 years. DS is also doing his first 2 years at a CC and will finish up his degree at an affiliated University. They are living at home for now, so we’re saving a significant amount on living expenses.

We’ll most likely have $’s left over for one or both to pursue their masters at some point.
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dogagility
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Re: What’s “your number” for each kid’s 529?

Post by dogagility »

geerhardusvos wrote: Wed Dec 09, 2020 2:52 pm
pepperz wrote: Wed Oct 28, 2020 9:09 am Do you have a goal amount for kids 529 that you’re proactively working towards?

My kids are 3 and 1.5 years old and trying to work out my philosophy here.
$0.00

I paid for all my university, and so can they. Heck, they might not even go to a traditional university. Grandparents and scholarships may come through, but my kids need to own it.
Just like they owned being brought into the world...
All children spill milk. Learn to smile and wipe it up. -- A Farmer's Wife
JVT
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Re: What’s “your number” for each kid’s 529?

Post by JVT »

10k before we started trying, 100k before kindergarten and then let it compound (Contributing 1k/month, currently have 108k, a 4 year old, and are trying for number 2). DW and I both did grad school on scholarship. DW did undergrad on scholarship and I did it with money from family and working. Goal is to pay for 4 years of undergrad outright, rolling any unused funds into graduate school should it be in the cards. Any unused funds after graduate school will ride for the next generation. For DW and I college was always the expectation, and it will be for our kids.

Due to the inflation of college costs I don't feel it is not reasonable to expect kids working their way through college will result in anything other than huge loans as a yoke around their neck. Maybe the hit the lottery on scholarships, but its nothing to bank on.
Last edited by JVT on Wed Dec 09, 2020 9:41 pm, edited 1 time in total.
stoptothink
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Re: What’s “your number” for each kid’s 529?

Post by stoptothink »

dogagility wrote: Wed Dec 09, 2020 9:26 pm
geerhardusvos wrote: Wed Dec 09, 2020 2:52 pm
pepperz wrote: Wed Oct 28, 2020 9:09 am Do you have a goal amount for kids 529 that you’re proactively working towards?

My kids are 3 and 1.5 years old and trying to work out my philosophy here.
$0.00

I paid for all my university, and so can they. Heck, they might not even go to a traditional university. Grandparents and scholarships may come through, but my kids need to own it.
Just like they owned being brought into the world...
My kids' 529s are fully funded to cover 4yrs at local U(and they're 8 and 5), but this standpoint drives me nuts. Based upon the data I've come across, ~11% of kids in the U.S. have 529 accounts at all (let alone "fully funded"), there must be a lot of bad parents out there (in your perspective). If we did not have extra cash flow after meeting our needs and funding our retirement, I wouldn't feel bad at all that my kids had to "own it" (just like my wife and I, and our 10 combined siblings did).
Chris001122
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Re: What’s “your number” for each kid’s 529?

Post by Chris001122 »

4 x annual expenses of a in-state university payable by age 21. This is currently at 118,000 per child but I update it each year as it tends to go up every year. This has meant that we typically put 330 dollars per child per month in a 529 account. We had a few years when they were little that we were living with one income. Those years we contributed little to nothing, but after age 5 for the youngest, we went dual income agains and began saving again.

I'm hoping it will be enough and with scholarships it should be more than plenty for 4 years in my state. Other post-grad stuff is on their dime.
mottooscillator
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Re: What’s “your number” for each kid’s 529?

Post by mottooscillator »

I've got just over $200,000 in my 529 for my 4yo son. We did $30,000 in 2019 and $150,000 superfunding in 2020. Currently invested in Vanguard target 2034/2035 fund for the Nevada plan. I estimate $500,000 in there by the time he needs it. For us, it was the last tax advantaged account we opened and we allocated most of our free cash flow this year to stuffing it. We're done contributing now.
Prettyfrtnt
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Re: What’s “your number” for each kid’s 529?

Post by Prettyfrtnt »

KingRiggs wrote: Wed Dec 09, 2020 10:43 am
Prettyfrtnt wrote: Wed Dec 09, 2020 9:43 am 529 goals based on market doubling roughly every 7 years.

50k at birth
125k by 10
250k by graduation.

Fill it when you can. Birth is best.
Doubling every 7 years would assume a return of 10% annually.

That's a heavy lift for an equity-only portfolio, let alone one where you get more conservative as the child nears college.

My 529s were invested in all stocks until the kids hit about 14. By the time they went to college, the balance of each fund was about 50% contributions and 50% earnings.
Agree w you this won’t happen later so fill the buckets as needed based on this scale
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Re: What’s “your number” for each kid’s 529?

Post by 2tall4economy »

I find a 529 a nearly worthless investment vehicle. The cost benefit to me is simply not where it needs to be.

I put in the bare minimum to get the state income tax match ($20,000). I have it in first child’s name. I’ll tap it until it’s consumed, which it will be by the third kid getting into school and never look back.

I’d like them to invest a better one.
You can do anything you want in life. The rub is that there are consequences.
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teen persuasion
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Re: What’s “your number” for each kid’s 529?

Post by teen persuasion »

stoptothink wrote: Wed Dec 09, 2020 9:45 pm
dogagility wrote: Wed Dec 09, 2020 9:26 pm
geerhardusvos wrote: Wed Dec 09, 2020 2:52 pm
pepperz wrote: Wed Oct 28, 2020 9:09 am Do you have a goal amount for kids 529 that you’re proactively working towards?

My kids are 3 and 1.5 years old and trying to work out my philosophy here.
$0.00

I paid for all my university, and so can they. Heck, they might not even go to a traditional university. Grandparents and scholarships may come through, but my kids need to own it.
Just like they owned being brought into the world...
My kids' 529s are fully funded to cover 4yrs at local U(and they're 8 and 5), but this standpoint drives me nuts. Based upon the data I've come across, ~11% of kids in the U.S. have 529 accounts at all (let alone "fully funded"), there must be a lot of bad parents out there (in your perspective). If we did not have extra cash flow after meeting our needs and funding our retirement, I wouldn't feel bad at all that my kids had to "own it" (just like my wife and I, and our 10 combined siblings did).
I agree that this standpoint drives me crazy, too.

I've done the math for my family's situation, funding a 529 would be counterproductive. It would make funding a college degree MORE difficult, and endanger retirement for us. Lose-lose scenario. This likely would be true for a majority of lower and middle-class families (thus a majority of the country).

There's a reason funding 529s is something like #10 on the priority list for where to save. Most people never fill all the higher priority levels.
Firemenot
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Re: What’s “your number” for each kid’s 529?

Post by Firemenot »

teen persuasion wrote: Thu Dec 10, 2020 8:56 am
stoptothink wrote: Wed Dec 09, 2020 9:45 pm
dogagility wrote: Wed Dec 09, 2020 9:26 pm
geerhardusvos wrote: Wed Dec 09, 2020 2:52 pm
pepperz wrote: Wed Oct 28, 2020 9:09 am Do you have a goal amount for kids 529 that you’re proactively working towards?

My kids are 3 and 1.5 years old and trying to work out my philosophy here.
$0.00

I paid for all my university, and so can they. Heck, they might not even go to a traditional university. Grandparents and scholarships may come through, but my kids need to own it.
Just like they owned being brought into the world...
My kids' 529s are fully funded to cover 4yrs at local U(and they're 8 and 5), but this standpoint drives me nuts. Based upon the data I've come across, ~11% of kids in the U.S. have 529 accounts at all (let alone "fully funded"), there must be a lot of bad parents out there (in your perspective). If we did not have extra cash flow after meeting our needs and funding our retirement, I wouldn't feel bad at all that my kids had to "own it" (just like my wife and I, and our 10 combined siblings did).
I agree that this standpoint drives me crazy, too.

I've done the math for my family's situation, funding a 529 would be counterproductive. It would make funding a college degree MORE difficult, and endanger retirement for us. Lose-lose scenario. This likely would be true for a majority of lower and middle-class families (thus a majority of the country).

There's a reason funding 529s is something like #10 on the priority list for where to save. Most people never fill all the higher priority levels.
My wife had zero help from her parents and did just fine. In fact, I would say she had negative help because they wouldn’t help and their income was detrimental to her in the calculations. As a result, she chose a very cheap state school, majored in something with good job prospects (engineering), chose an engineering program that she could do in 4 years as opposed to 5, and worked her way through school to pay for living costs. Because she was on the hook for everything her incentives for decision making were strong. She paid off her school loans within a couple years of graduating.
happylife
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Re: What’s “your number” for each kid’s 529?

Post by happylife »

We currently have about $280k ($80k from grandparents 529) for our DD going to college next year. Our DS is 4 years younger and his account is about $255k ($55k from grandparents 529). We estimate this will be almost enough to cover 4-year private university. DD's 529 is $83k principal and $117k earnings in our 529s (can't speak to grandparents). DS's 529 has slightly more than half earnings (again, without the grandparents). His will also likely cover almost all of 4-year private. If they choose public, we'll save the rest for grad school or future generations. Absolutely no regrets with using 529s, and we do not receive a state tax deduction.

One year we put in $56k, and many years none. Last contribution was $5k to DS's 529 in 2019. About 12 years ago, our salaries became high enough that we realized we would not receive any financial aid or the AOTC, and we upped our 529 savings. Now, all non-retirement savings go into taxable. We both have 3 degrees, so have assumed that college was in the cards for our kids. I was a financial aid kid with divorced parents who struggled to pay for my private university. Some may call this a dumb move for my parents, but it was an elite college and I did also receive a lot of aid. I believe that my college education changed the course of my life (for my kids private university probably will not). I've paid my parents both back in spades over the decades. We don't "owe" our kids college, but we feel lucky financially to be able to provide it. And to not have FAFSA trauma that I had with my fighting parents is a huge relief.
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geerhardusvos
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Re: What’s “your number” for each kid’s 529?

Post by geerhardusvos »

dogagility wrote: Wed Dec 09, 2020 9:26 pm
geerhardusvos wrote: Wed Dec 09, 2020 2:52 pm
pepperz wrote: Wed Oct 28, 2020 9:09 am Do you have a goal amount for kids 529 that you’re proactively working towards?

My kids are 3 and 1.5 years old and trying to work out my philosophy here.
$0.00

I paid for all my university, and so can they. Heck, they might not even go to a traditional university. Grandparents and scholarships may come through, but my kids need to own it.
Just like they owned being brought into the world...
What’s your point?

The way things are going, the joke will be on people who funded 529. Universities are broken and most degrees are a waste. My children will more likely skip college and own their own businesses and far out earn their peers with no debt. If they are interested in STEM, there are a couple tech programs that don’t cost nearly as much as traditional universities. You can get a full ride from academic excellence and corporate sponsorship.

For what it’s worth, I never received one dollar after my 15th birthday. I have worked full-time since then. I graduated from a great local University with $150,000 in student loan debt. Fast forward 10 years, I am now in my early 30s and a millionaire, debt-free. I’m sure my kids can do better than me. In fact, they are very likely to do better than kids who had everything handed to them. And I’m giving them something much more valuable than $250,000 in a 529 account. I’m giving them love, pushing them to think outside the box and be entrepreneurs, teaching them responsibility and stewardship, and showing them some serious grit.
VTSAX and chill
Fishing2retire
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Re: What’s “your number” for each kid’s 529?

Post by Fishing2retire »

3 kids age 9,7,3. Started $50 a month for each the year they were born plus whatever gift money from family they get from birthdays etc. my state has a tax deductible plan. No specific number in mind we will help as much as we can when it runs out as long as they stay local. We try to pay ourselves first because you can never get that back when your ready to retire.
Firemenot
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Re: What’s “your number” for each kid’s 529?

Post by Firemenot »

Fishing2retire wrote: Thu Dec 10, 2020 11:59 am 3 kids age 9,7,3. Started $50 a month for each the year they were born plus whatever gift money from family they get from birthdays etc. my state has a tax deductible plan. No specific number in mind we will help as much as we can when it runs out as long as they stay local. We try to pay ourselves first because you can never get that back when your ready to retire.
Good approach in my book. There’s also likely to be a lot of disruption in secondary education post-Covid and post cost bubble. It’s possible there will be new options that are much more cost effective.
humblecoder
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Re: What’s “your number” for each kid’s 529?

Post by humblecoder »

geerhardusvos wrote: Thu Dec 10, 2020 11:25 am
dogagility wrote: Wed Dec 09, 2020 9:26 pm
geerhardusvos wrote: Wed Dec 09, 2020 2:52 pm
pepperz wrote: Wed Oct 28, 2020 9:09 am Do you have a goal amount for kids 529 that you’re proactively working towards?

My kids are 3 and 1.5 years old and trying to work out my philosophy here.
$0.00

I paid for all my university, and so can they. Heck, they might not even go to a traditional university. Grandparents and scholarships may come through, but my kids need to own it.
Just like they owned being brought into the world...
What’s your point?

The way things are going, the joke will be on people who funded 529. Universities are broken and most degrees are a waste. My children will more likely skip college and own their own businesses and far out earn their peers with no debt. If they are interested in STEM, there are a couple tech programs that don’t cost nearly as much as traditional universities. You can get a full ride from academic excellence and corporate sponsorship.

For what it’s worth, I never received one dollar after my 15th birthday. I have worked full-time since then. I graduated from a great local University with $150,000 in student loan debt. Fast forward 10 years, I am now in my early 30s and a millionaire, debt-free. I’m sure my kids can do better than me. In fact, they are very likely to do better than kids who had everything handed to them. And I’m giving them something much more valuable than $250,000 in a 529 account. I’m giving them love, pushing them to think outside the box and be entrepreneurs, teaching them responsibility and stewardship, and showing them some serious grit.
Honestly, these sorts of debates are pointless. On the one side you have the "I had to walk up hill to school both ways in the snow for 10 miles in bare feet carrying a 200 lbs boulder on my back and I was able to tough it out so my kids are going to have to as well" parents.

On the other side you have the "I want to give my child as many advantages in life as possible even if it robs them of their drive and independence" parents.

As with all things, no one approach is correct. People who have been raised in both philosophies have been successful. There is no one single formula for success and if anyone tells you otherwise, then question their advice.
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dogagility
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Re: What’s “your number” for each kid’s 529?

Post by dogagility »

geerhardusvos wrote: Thu Dec 10, 2020 11:25 am
dogagility wrote: Wed Dec 09, 2020 9:26 pm
geerhardusvos wrote: Wed Dec 09, 2020 2:52 pm
pepperz wrote: Wed Oct 28, 2020 9:09 am Do you have a goal amount for kids 529 that you’re proactively working towards?

My kids are 3 and 1.5 years old and trying to work out my philosophy here.
$0.00

I paid for all my university, and so can they. Heck, they might not even go to a traditional university. Grandparents and scholarships may come through, but my kids need to own it.
Just like they owned being brought into the world...
What’s your point?

The way things are going, the joke will be on people who funded 529. Universities are broken and most degrees are a waste. My children will more likely skip college and own their own businesses and far out earn their peers with no debt. If they are interested in STEM, there are a couple tech programs that don’t cost nearly as much as traditional universities. You can get a full ride from academic excellence and corporate sponsorship.

For what it’s worth, I never received one dollar after my 15th birthday. I have worked full-time since then. I graduated from a great local University with $150,000 in student loan debt. Fast forward 10 years, I am now in my early 30s and a millionaire, debt-free. I’m sure my kids can do better than me. In fact, they are very likely to do better than kids who had everything handed to them. And I’m giving them something much more valuable than $250,000 in a 529 account. I’m giving them love, pushing them to think outside the box and be entrepreneurs, teaching them responsibility and stewardship, and showing them some serious grit.
Goodonya. Hope it all works out for your child. Plans have a way of changing.
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Re: What’s “your number” for each kid’s 529?

Post by LadyGeek »

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Re: What’s “your number” for each kid’s 529?

Post by Vulcan »

KlangFool wrote: Mon Nov 02, 2020 1:43 pm
EnjoyIt wrote: Mon Nov 02, 2020 1:38 pm But, if one of our kids gets into Ivy. We will not deny them that opportunity and will pay for it as well. I am actually considering adding a bit more money to that college fund. Maybe get with a goal of $150k.

We max out our tax advantages accounts and still save in taxable. Maybe worth diverting just a bit more towards 529.
Not necessarily a good idea. Less money in the 529 = maybe a bigger discount for you in terms of those schools. You need to do research in this area. Check out the poster, "Vulcan" experience for MIT.

You can reduce your money in the taxable account easily by pre-paying the mortgage.
529 and taxable accounts are treated equivalently from the finaid standpoint, so there is no finaid disadvantage to moving money from taxable to a 529.

But home equity is often excluded in full or in part, so there is potential advantage in moving money from taxable into equity in one's primary home.

Of course, if your money is locked in a 529, you won't have the option to move it to home equity penalty-free if your kid gets admitted to their dream school.

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Re: What’s “your number” for each kid’s 529?

Post by dmcmahon »

My dad paid for college so I graduated with very little debt. He’s in Heaven now and I was too stupid to thank him. So, I’m paying it forward: $150k per kid for his grandchildren. God rest you, dad!
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Re: What’s “your number” for each kid’s 529?

Post by Minty »

$150K per child. Now we've started funding the older one's 529. Although she's already graduated, I want to pay the loans with tax free earnings.
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Re: What’s “your number” for each kid’s 529?

Post by BabaWawa »

Leesbro63 wrote: Wed Dec 09, 2020 7:52 am
BabaWawa wrote: Wed Dec 09, 2020 5:19 am
marcopolo wrote: Tue Nov 03, 2020 12:08 pm
KlangFool wrote: Tue Nov 03, 2020 8:06 am
marcopolo wrote: Mon Nov 02, 2020 7:01 pm I find it a bit odd that people love Roth accounts so much, and will go to such great lengths to get more money into them (Backdoor Roth, Mega Backdoor Roth, paying taxes upfront to do Roth Conversion), but then dislike 529 plans so much.

If used for college expenses, 529 plans are essentially a Roth account with very high contribution limits.
In some states, they are even better, as you can get a tax deduction as well.
The answer is obvious. Roth account can be used for any purpose. 529 can only be used for one purpose.

KlangFool
Imagine that, a tax break for education is only a tax break if used for education!
I agree, if you plan to spend it on other things, don't put it into a 529.
Best plans can change. Risk of overfunding does not seem worth it to me. Not willing to pay future tax rates and a 10% penalty on the earnings should I need it or use it for something other than education. Most Bogleheads will agree that your retirement savings should be top priority, so you shouldn't be surprised that Roths are more popular.
That's fine unless it's just a rationalization to not save for college. In my thinking, risk of overfunding is a good problem to have.
Most Bogleheads don't rationalize, rather every aspect of our financial life is well thought out with a solid plan unique to our situation. A combination of significant assets in taxable accounts, Roth IRA's, and tIRA's, as well as a modest amount in 529 plans has us well prepared to put our children's children through college.
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Re: What’s “your number” for each kid’s 529?

Post by BabaWawa »

marcopolo wrote: Wed Dec 09, 2020 4:43 pm
BabaWawa wrote: Wed Dec 09, 2020 5:19 am
marcopolo wrote: Tue Nov 03, 2020 12:08 pm
KlangFool wrote: Tue Nov 03, 2020 8:06 am
marcopolo wrote: Mon Nov 02, 2020 7:01 pm I find it a bit odd that people love Roth accounts so much, and will go to such great lengths to get more money into them (Backdoor Roth, Mega Backdoor Roth, paying taxes upfront to do Roth Conversion), but then dislike 529 plans so much.

If used for college expenses, 529 plans are essentially a Roth account with very high contribution limits.
In some states, they are even better, as you can get a tax deduction as well.
The answer is obvious. Roth account can be used for any purpose. 529 can only be used for one purpose.

KlangFool
Imagine that, a tax break for education is only a tax break if used for education!
I agree, if you plan to spend it on other things, don't put it into a 529.
Best plans can change. Risk of overfunding does not seem worth it to me. Not willing to pay future tax rates and a 10% penalty on the earnings should I need it or use it for something other than education. Most Bogleheads will agree that your retirement savings should be top priority, so you shouldn't be surprised that Roths are more popular.

I planned based on an attempt to optimize for the most likely scenario.

Based on our family history of college attendance, it seemed there was a vert high probability that my kids would be going on to some type of post high school education. 529 plans can be used for vocational and trade schools as well.

Sure, there was a chance that they might not have gone. So, in that small likelihood case, I would have paid taxes and some penalties. But, that is weighed against the significantly higher probability that we would save many thousands of dollars in taxes. It was an easy choice.

Happens to have turned out that we were right.

We will have significant funds left over. No worries, we will pass down to next generation, and they will also benefit from years of tax-free growth
Glad your plan worked for you. Right now our emphasis is on Roth conversions not 529s, in order to maximize our options on how that money is utilized by us or future generations. The Roths provide tax free growth as well as tax free withdrawals for any reason.
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Re: What’s “your number” for each kid’s 529?

Post by EnjoyIt »

Minty wrote: Fri Dec 11, 2020 2:43 pm $150K per child. Now we've started funding the older one's 529. Although she's already graduated, I want to pay the loans with tax free earnings.
Are you sure you can pay school loans with a 529?
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Re: What’s “your number” for each kid’s 529?

Post by marcopolo »

EnjoyIt wrote: Sat Dec 12, 2020 12:28 pm
Minty wrote: Fri Dec 11, 2020 2:43 pm $150K per child. Now we've started funding the older one's 529. Although she's already graduated, I want to pay the loans with tax free earnings.
Are you sure you can pay school loans with a 529?
SECURE Act now allows up to $10,000 to be used from 529 to pay for student loan of beneficiary.

It also allows an additional $10,000 to be used towards each sibling of the beneficiary.

So, Minty could use older and younger child's 529 in combination to pay off $20,000 of loans of older child.
Once in a while you get shown the light, in the strangest of places if you look at it right.
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Re: What’s “your number” for each kid’s 529?

Post by EnjoyIt »

marcopolo wrote: Sat Dec 12, 2020 12:38 pm
EnjoyIt wrote: Sat Dec 12, 2020 12:28 pm
Minty wrote: Fri Dec 11, 2020 2:43 pm $150K per child. Now we've started funding the older one's 529. Although she's already graduated, I want to pay the loans with tax free earnings.
Are you sure you can pay school loans with a 529?
SECURE Act now allows up to $10,000 to be used from 529 to pay for student loan of beneficiary.

It also allows an additional $10,000 to be used towards each sibling of the beneficiary.

So, Minty could use older and younger child's 529 in combination to pay off $20,000 of loans of older child.
Not much, but better than nothing.
A time to EVALUATE your jitters: | https://www.bogleheads.org/forum/viewtopic.php?f=10&t=79939&start=400#p5275418
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Re: What’s “your number” for each kid’s 529?

Post by kleiner »

Just caught up reading 9 pages of this thread. We somehow skipped 529s altogether and saved up for education (steady $1000 per month in index funds) in post-tax accounts. We always maxed out all of our 401Ks so retirement savings was never affected. As it happens, we never had to touch this "college savings". Over the years, our salaries progressively increased to the extent that we were able to cashflow both of my kids college education. So we now have a lot of extra retirement savings.

So it all worked out. But in hindsight, I think I should have gone with the 529 approach for savings. I was turned off by the lack of control over investments in my state's 529 plan. The tax advantages might have been significant.
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Re: What’s “your number” for each kid’s 529?

Post by marcopolo »

kleiner wrote: Sat Dec 12, 2020 4:08 pm Just caught up reading 9 pages of this thread. We somehow skipped 529s altogether and saved up for education (steady $1000 per month in index funds) in post-tax accounts. We always maxed out all of our 401Ks so retirement savings was never affected. As it happens, we never had to touch this "college savings". Over the years, our salaries progressively increased to the extent that we were able to cashflow both of my kids college education. So we now have a lot of extra retirement savings.

So it all worked out. But in hindsight, I think I should have gone with the 529 approach for savings. I was turned off by the lack of control over investments in my state's 529 plan. The tax advantages might have been significant.
Water under the bridge now, but there is requirement to limit investments to your own state's 529 plan. If you don't like the investment choices in your state's plan, you can invest in a different state.
Once in a while you get shown the light, in the strangest of places if you look at it right.
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Re: What’s “your number” for each kid’s 529?

Post by bogletay »

We are planning on $10K per year, per child (we only have 1 right now). My hope is this gets us $200-$250K each by the time college comes around! Goal is to be able to afford tuition/room/board for any school, public or private, they'd like to attend.
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