We saved nothing for college...BUT...

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Topic Author
maestro1868
Posts: 106
Joined: Wed Sep 02, 2020 9:23 am

We saved nothing for college...BUT...

Post by maestro1868 »

[Topic is now in Personal Finance (Not Investing) - mod mkc]

Yes, we have saved absolutely nothing for college. No 529 account of any kind.

Child #1 – graduates in 2026
Child #2 - graduates in 2028

Current retirement savings (his and hers): $668,000.00
Annual Contributions to both 403b(tsa) and 457b Roth: $62,000.00

Retirement Dates:
Him (NYS teacher pension – age 55 – early penalty (2028): $70k.
Him (NYS teacher pension - age 59 – full pension (2031): $96k
Her (NYS teacher pension – age 55 – full pension (2031): $100k

Current Mortgage: $270k (2.99% - final payment in 2035)
House Appraisal: $750k

Instead of saving money in a 529 account, we decided years ago to save ourselves first. We have automated our retirement savings and increase our contributions each year. We don’t want to interrupt our retirement contributions. If we cash flow the college expenses, then we would need to stop our retirement contributions.

We would like to get some feedback on different approaches to prepare for this financial challenge (paying for college for two kids).

Could compounding at our savings rate outperform the interest rate of a Parent Plus loan, Heloc loan, etc.? Would it make sense to interrupt the compounding machine at this time?

P.S. Thanks to all the members in this forum for helping us achieve our small retirement savings. We are incredibly grateful for all the advice we received from the members in this community years ago.
Last edited by maestro1868 on Thu May 09, 2024 10:08 pm, edited 9 times in total.
toddthebod
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Re: We saved nothing for college...BUT...

Post by toddthebod »

Send them somewhere cheap and/or that offers good financial aid. Stop annual retirement contributions. With a full pension and the ability to save $60,000/year, you don't need to save for retirement. You will clearly have more than enough income.
Coastfical
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Re: We saved nothing for college...BUT...

Post by Coastfical »

Not sure what financial challenge you are referring to? College costs? Cash flow it, loans, kid works summers and during the year, community college first two years, AP classes and credits, in state vs out of state (although some private schools actually have good grants/ scholarships). We told ours we could contribute up to 20k per year, and anything over that they needed to pick up with scholarships, financial aid, loans, work study , summer jobs, etc. two kids in school at same time helps with FAFSA/ family contribution.
aristotelian
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Re: We saved nothing for college...BUT...

Post by aristotelian »

What kind of approaches are you looking for? You have eliminated one of the primary tax advantages vehicles for educational expenses. Aside from that, you can cash flow as much as you can and take on debt for the rest.
TheCoolerKing
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Joined: Tue Apr 09, 2024 2:57 pm

Re: We saved nothing for college...BUT...

Post by TheCoolerKing »

Do you get to collect social security as a result of contributions you made as a teacher? I know there is at least one state where retired teachers do not receive social security. If you both collect social security, receive 196K in pensions, and have a 403B and whatever other accounts, you most likely can refrain from collecting SS until you reach the age to receive the maximum benefit. Advise your kids to join the Reserves, go to a community college for the first year, and then go to their school of choice and become an RA. Between you and Uncle Sam, they should be able to finance school just fine.
Workqa
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Joined: Mon Apr 08, 2024 10:46 am

Re: We saved nothing for college...BUT...

Post by Workqa »

The main benefit of 529 account is tax-free growth. But you are saving your money in roth 403B and 457, both offer tax-free growth. So you essentially eliminated the restrictions associated with 529.

To the extent that you can cash flow college costs, I think you made the right choice.
WS1
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Re: We saved nothing for college...BUT...

Post by WS1 »

But you have $62,000/year to direct towards college without reducing any expenses. Where’s the problem?
Triple digit golfer
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Re: We saved nothing for college...BUT...

Post by Triple digit golfer »

You don't want to interrupt retirement contributions. So you've made your decision that you're not helping your kids, it seems. What exactly are you asking?
finite_difference
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Re: We saved nothing for college...BUT...

Post by finite_difference »

You could have your children take loans, and then keep saving for now, and help them pay them back later when they come due.

Does NY offer a tax deduction for saving in a 529? If so it might be worth using the 529 as a pass through in that case if permitted.

Cash -> 529 -> pay college expenses using 529

Instead of

Cash -> pay college expenses

But look up the rules.
The most precious gift we can offer anyone is our attention. - Thich Nhat Hanh
livesoft
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Re: We saved nothing for college...BUT...

Post by livesoft »

maestro1868 wrote: Thu May 09, 2024 7:20 pm We would like to get some feedback on different approaches to prepare for this financial challenge (paying for college for two kids).
I think you already know the approaches:

1. Apply for financial aid.
2. Borrow money.
3. I believe that financial aid results will assume that parents stopped contributing to 403(b), 401(k), IRA and Roth IRA plans.
4. Tell your kids they had better get some jobs and work not only in high school but also in college like many of us did.
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calwatch
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Re: We saved nothing for college...BUT...

Post by calwatch »

If there are any taxable accounts, keep contributing to the retirement accounts and spend down taxable. That will increase available financial aid, since retirement accounts aren't counted unless you go to one of the several dozen mostly private prestigious schools that use the CSS Profile. Same for paying down the mortgage as well, home equity is not counted. It is unlikely they would get much, but there might be something there. If you want to artificially lower your income, you might qualify for more financial aid, but I don't think the juice is worth the squeeze there.
KlangFool
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Re: We saved nothing for college...BUT...

Post by KlangFool »

OP,

How old are you?

We know that you will get your pension at 55 years old. But, we do not know how old you are at this moment.

KlangFool
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jcchen
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Re: We saved nothing for college...BUT...

Post by jcchen »

consider putting 10k each year into NYS 529. NYS residents can deduct 10k from their state income.
Grt2bOutdoors
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Re: We saved nothing for college...BUT...

Post by Grt2bOutdoors »

Stop saving for retirement, you gave $196k in COLA’d pensions from a fully funded pension plan, Social Security and $668k in retirement plans. You have a high income, redirect your retirement savings - put $10k in NYS529 Direct Plan - put it in the money market option, take $10k deduction on NYS returns. Use rest of redirected income to pay the tuition.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
GG1273
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Re: We saved nothing for college...BUT...

Post by GG1273 »

We didn't save anything either!
Both our daughters wanted to follow their mother's footsteps (NOT dad's in finance) in Nursing and decided on 2 in-state colleges. The oldest decided on Rutgers - New Brunswick and did very well there - wanted to have the D1 sports atmosphere and our younger daughter decided on a smaller school The College of NJ, with a good program. Some scholorships but we paid about 60% each.

Since they've been out of undergrad, our youngest decided on going for her MSN paid for by employer and oldest is just finishing studies to be a PA, both via Rutgers' programs.
Happy with both outcomes and BOTH are contributing to their 403b's!
Nohbdy
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Re: We saved nothing for college...BUT...

Post by Nohbdy »

FAFSA no longer looks at retirement accounts nor contributions when evaluating aid. This might be the first year for that change. https://studentaid.gov/2324/help/students-investments

If your MAGI can be below $160k then you may qualify for the American Opportunity Tax Credit. We are hoping to cash flow the first $4k/yr/kid to get the $2,500 credit. In my opinion, this should be inflation adjusted but I don’t think it is.

https://www.irs.gov/credits-deductions/individuals/aotc

Even if you don’t qualify for free money type of aid, you may qualify for workstudy. My understanding is that workstudy jobs offer students great flexibility around school/work balance like studying at work when it’s slow.

I agree with what calwatch said.
Parkinglotracer
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Re: We saved nothing for college...BUT...

Post by Parkinglotracer »

Consider paying for part of kids college, having kids work and pay for some, and having kids borrow some. Have them attend a local community college and live at home to save money.

Look into kids joining state air guard to pay for school. Or ROTC. Or a service academy. I went to AF Academy and was paid 6K a year to go to school. The AF paid for an MBA at Rensselaer Poly Tech. The Air Force paid for basic flight school and years of flight training.

If you don’t want to drop bombs, coast guard academy might be a consideration. A buddy had three of his kids graduate from there.
delamer
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Re: We saved nothing for college...BUT...

Post by delamer »

The real question is how much will you need over-and-above your pensions (and any Social Security for which you are eligible) to support yourselves in retirement?

You decided to prioritize saving for retirement, which is following standard financial advice.

But have you calculated how large you nest egg needs to be? That should tell you whether you have any leeway to redirect some of your retirement savings toward college.

If you don’t, then working longer is am option.
One thing that humbles me deeply is to see that human genius has its limits while human stupidity does not. - Alexandre Dumas, fils
balofagus
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Re: We saved nothing for college...BUT...

Post by balofagus »

maestro1868 wrote: Thu May 09, 2024 7:20 pm Him (NYS teacher pension – age 55 – early penalty): $70k. OR (NYS teacher pension - age 59 – full pension): $96k
Can’t we think of this as (some) million(s) set aside for retirement?
Her (NYS teacher pension – age 55 – full pension): $100k
Then these as more?
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whodidntante
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Re: We saved nothing for college...BUT...

Post by whodidntante »

Look on the bright side. This way, they'll learn the value of hard work and debt management sooner, rather than later.
Topic Author
maestro1868
Posts: 106
Joined: Wed Sep 02, 2020 9:23 am

Re: We saved nothing for college...BUT...

Post by maestro1868 »

Workqa wrote: Thu May 09, 2024 7:49 pm The main benefit of 529 account is tax-free growth. But you are saving your money in roth 403B and 457, both offer tax-free growth. So you essentially eliminated the restrictions associated with 529.

To the extent that you can cash flow college costs, I think you made the right choice.
We definitely had this in mind when we decided to not contribute to a 529. Not sure if this is completely accurate, but I think I read that having a 529 can, in some situations, reduce a student's aid by 5 to 6%.
avalpert1
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Re: We saved nothing for college...BUT...

Post by avalpert1 »

You are looking at least $170k in income starting at 55? And you have another $1m+ in assets? And you currently save $62k in retirement?

Your retirement sounds very comfortable already - you can definitely afford to cash flow your kids college, it is up to you to choose if that is something you value and want to spend your money on or not...
bmcgin
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Re: We saved nothing for college...BUT...

Post by bmcgin »

Any chance of scholarships? Florida has a "Bright Futures Scholarship" that pays 100% (or very close to 100%) tuition at any state college. The qualifications are a good GPA, a decent SAT score, and some volunteer service hours. Possibly NY has something similar?
Topic Author
maestro1868
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Re: We saved nothing for college...BUT...

Post by maestro1868 »

finite_difference wrote: Thu May 09, 2024 8:16 pm You could have your children take loans, and then keep saving for now, and help them pay them back later when they come due.

Does NY offer a tax deduction for saving in a 529? If so it might be worth using the 529 as a pass through in that case if permitted.

Cash -> 529 -> pay college expenses using 529

Instead of

Cash -> pay college expenses

But look up the rules.
This is what we had in mind. Save for retirement. Let compound interest do its work. Then help them later, after they experience some pain and suffering. :D
Topic Author
maestro1868
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Re: We saved nothing for college...BUT...

Post by maestro1868 »

calwatch wrote: Thu May 09, 2024 8:19 pm If there are any taxable accounts, keep contributing to the retirement accounts and spend down taxable. That will increase available financial aid, since retirement accounts aren't counted unless you go to one of the several dozen mostly private prestigious schools that use the CSS Profile. Same for paying down the mortgage as well, home equity is not counted. It is unlikely they would get much, but there might be something there. If you want to artificially lower your income, you might qualify for more financial aid, but I don't think the juice is worth the squeeze there.
Thank you for this...
Hebell
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Re: We saved nothing for college...BUT...

Post by Hebell »

We didn't either. We pursued scholarships all through her last 2 years of high school. That plus school merit aid got her through her undergrad in engineering at a well regarded state university at no cost to us. Her SAT scores were very high. Stanford covered 60% of her graduate school costs in structural engineering, and then the music department kicked in another several thousand, to play violin in their orchestra. She was concert master in her second year. We were very lucky. But we also submitted around 60 scholarship applications, one of the most sizeable wins being from Northrop Grumman. By we, I mean, I kept the schedule and paid postage. She did the work! It was a grind.
Topic Author
maestro1868
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Re: We saved nothing for college...BUT...

Post by maestro1868 »

KlangFool wrote: Thu May 09, 2024 8:27 pm OP,

How old are you?

We know that you will get your pension at 55 years old. But, we do not know how old you are at this moment.

KlangFool
KlangFool!

At this moment, I am 51.

My gut feeling tells me that I shouldn't interrupt the compounding process.

Could compounding at our savings rate outperform the interest rate of a Parent Plus loan, Heloc loan, etc.?
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Raspberry-503
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Re: We saved nothing for college...BUT...

Post by Raspberry-503 »

For my kids I told them I would pay 4 years at the local state college in the 4 to an apartment dorms. They could go to a more expensive college or find other lodging arrangements, but they'd need to pay the difference.

I had about 1/2 the amount saved in my emergency fund, but was able to cash-flow it all. Not the best thing for my son but he joined college in 2020 and had to live at home because of COVID. Sucked for him but saved me $20K. Once he was able to live on campus he did because I think it's a big part of growing up and th college expérience, but if I had not been able to cash-flow it I may have asked him to live at home. Not sure TBH, I have enough in Ibonds that I may have dipped into that.
I still used a 529 because I get a discount on my state taxes, my contributions are not taxable. So I'd load the account at the start of the month at and drew it down during the year. I saved around $1000 a year in taxes. Not the same as loading an account years in advance but I never assumed my kids would go to college for sure.

My son graduated today! He'll probably go on for a PhD but he needs to figure out how to finance it. I may help with a partial 0% loan but he need to figure out how to finance it.
Topic Author
maestro1868
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Re: We saved nothing for college...BUT...

Post by maestro1868 »

GG1273 wrote: Thu May 09, 2024 8:43 pm We didn't save anything either!
Both our daughters wanted to follow their mother's footsteps (NOT dad's in finance) in Nursing and decided on 2 in-state colleges. The oldest decided on Rutgers - New Brunswick and did very well there - wanted to have the D1 sports atmosphere and our younger daughter decided on a smaller school The College of NJ, with a good program. Some scholorships but we paid about 60% each.

Since they've been out of undergrad, our youngest decided on going for her MSN paid for by employer and oldest is just finishing studies to be a PA, both via Rutgers' programs.
Happy with both outcomes and BOTH are contributing to their 403b's!
Wow!
Topic Author
maestro1868
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Re: We saved nothing for college...BUT...

Post by maestro1868 »

Nohbdy wrote: Thu May 09, 2024 8:44 pm FAFSA no longer looks at retirement accounts nor contributions when evaluating aid. This might be the first year for that change. https://studentaid.gov/2324/help/students-investments

If your MAGI can be below $160k then you may qualify for the American Opportunity Tax Credit. We are hoping to cash flow the first $4k/yr/kid to get the $2,500 credit. In my opinion, this should be inflation adjusted but I don’t think it is.

https://www.irs.gov/credits-deductions/individuals/aotc

Even if you don’t qualify for free money type of aid, you may qualify for workstudy. My understanding is that workstudy jobs offer students great flexibility around school/work balance like studying at work when it’s slow.

I agree with what calwatch said.
FAFSA no longer looks at retirement accounts nor contributions when evaluating aid? Well, this seems like a good thing. I didn't know about this change. Thank you.
Topic Author
maestro1868
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Re: We saved nothing for college...BUT...

Post by maestro1868 »

Parkinglotracer wrote: Thu May 09, 2024 8:45 pm Consider paying for part of kids college, having kids work and pay for some, and having kids borrow some. Have them attend a local community college and live at home to save money.

Look into kids joining state air guard to pay for school. Or ROTC. Or a service academy. I went to AF Academy and was paid 6K a year to go to school. The AF paid for an MBA at Rensselaer Poly Tech. The Air Force paid for basic flight school and years of flight training.

If you don’t want to drop bombs, coast guard academy might be a consideration. A buddy had three of his kids graduate from there.
Daughter is interested in medicine. My son wants to follow in our footsteps in teaching. However, he did mention joining the Air Force and then becoming a teacher. Both are hardworking and kind kids.
Topic Author
maestro1868
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Re: We saved nothing for college...BUT...

Post by maestro1868 »

delamer wrote: Thu May 09, 2024 9:03 pm The real question is how much will you need over-and-above your pensions (and any Social Security for which you are eligible) to support yourselves in retirement?

You decided to prioritize saving for retirement, which is following standard financial advice.

But have you calculated how large you nest egg needs to be? That should tell you whether you have any leeway to redirect some of your retirement savings toward college.

If you don’t, then working longer is am option.
In retirement, our plan is to live a very simple life. My truck has almost 200k and it still has a cassette deck. :D
z3r0c00l
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Re: We saved nothing for college...BUT...

Post by z3r0c00l »

State school e.g. SUNY.

If you send kids to expensive schools at this point, you are just burning money for the bragging rights. Beyond the total lack of value from a private school, perhaps even a liability after this year...

You can certainly afford to hold off on retirement savings for a few years at a time. You have a huge set of pensions, more than enough to live on in early retirement. Thanks for your service to our state, enjoy a long and comfortable retirement!
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Topic Author
maestro1868
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Re: We saved nothing for college...BUT...

Post by maestro1868 »

whodidntante wrote: Thu May 09, 2024 9:19 pm Look on the bright side. This way, they'll learn the value of hard work and debt management sooner, rather than later.
Good point.
Topic Author
maestro1868
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Re: We saved nothing for college...BUT...

Post by maestro1868 »

avalpert1 wrote: Thu May 09, 2024 9:23 pm You are looking at least $170k in income starting at 55? And you have another $1m+ in assets? And you currently save $62k in retirement?

Your retirement sounds very comfortable already - you can definitely afford to cash flow your kids college, it is up to you to choose if that is something you value and want to spend your money on or not...
My apologies. I left some important information out in my original post. I have edit the original post to include the actual retirement dates:

Retirement Dates:
Him (NYS teacher pension – age 55 – early penalty (2028): $70k.
Him (NYS teacher pension - age 59 – full pension (2031): $96k
Her (NYS teacher pension – age 55 – full pension (2031): $100k
Topic Author
maestro1868
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Re: We saved nothing for college...BUT...

Post by maestro1868 »

Hebell wrote: Thu May 09, 2024 9:35 pm We didn't either. We pursued scholarships all through her last 2 years of high school. That plus school merit aid got her through her undergrad in engineering at a well regarded state university at no cost to us. Her SAT scores were very high. Stanford covered 60% of her graduate school costs in structural engineering, and then the music department kicked in another several thousand, to play violin in their orchestra. She was concert master in her second year. We were very lucky. But we also submitted around 60 scholarship applications, one of the most sizeable wins being from Northrop Grumman. By we, I mean, I kept the schedule and paid postage. She did the work! It was a grind.
Thank you for this.
Topic Author
maestro1868
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Re: We saved nothing for college...BUT...

Post by maestro1868 »

Raspberry-503 wrote: Thu May 09, 2024 9:38 pm For my kids I told them I would pay 4 years at the local state college in the 4 to an apartment dorms. They could go to a more expensive college or find other lodging arrangements, but they'd need to pay the difference.

I had about 1/2 the amount saved in my emergency fund, but was able to cash-flow it all. Not the best thing for my son but he joined college in 2020 and had to live at home because of COVID. Sucked for him but saved me $20K. Once he was able to live on campus he did because I think it's a big part of growing up and th college expérience, but if I had not been able to cash-flow it I may have asked him to live at home. Not sure TBH, I have enough in Ibonds that I may have dipped into that.
I still used a 529 because I get a discount on my state taxes, my contributions are not taxable. So I'd load the account at the start of the month at and drew it down during the year. I saved around $1000 a year in taxes. Not the same as loading an account years in advance but I never assumed my kids would go to college for sure.

My son graduated today! He'll probably go on for a PhD but he needs to figure out how to finance it. I may help with a partial 0% loan but he need to figure out how to finance it.
Congrats on your son's graduation. Great perspective. Thanks again.
Sam_957
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Re: We saved nothing for college...BUT...

Post by Sam_957 »

Another recent change is that gifts from grandparents are not counted in any FAFSA calculations and they can even be from a grandparent owned 529.
My other vehicle is an index fund.
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Watty
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Re: We saved nothing for college...BUT...

Post by Watty »

maestro1868 wrote: Thu May 09, 2024 7:20 pm We don’t want to interrupt our retirement contributions.
Why?

With your pensions and Social Security you already have enough in retirement savings so I do not see any need to contribute more unless you have something like an employer 401k match which is free money which is too good to pass up.

My situation was a lot different since I did not have a large pension but when my kid was in college I ended up realizing that I could pay for his expenses out of my cash flow even if I cut my retirement account contribution down to just be enough to get my employer's 401k match.
rogue_economist
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Re: We saved nothing for college...BUT...

Post by rogue_economist »

Best option would be for the kids to go to a top university that meets 100% of financial need without loans.
Second best option would be to go to a good university that would offer them large merit based aid packages.

Not saving anything for college is fine if you prep your kids to take advantage of the best sources of outside funding.
Society grows great when old men plant trees whose shade they shall never sit in
Valuethinker
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Re: We saved nothing for college...BUT...

Post by Valuethinker »

maestro1868 wrote: Thu May 09, 2024 7:20 pm Yes, we have saved absolutely nothing for college. No 529 account of any kind.

Child #1 – graduates in 2026
Child #2 - graduates in 2028

Current retirement savings (his and hers): $668,000.00
Annual Contributions to both 403b(tsa) and 457b Roth: $62,000.00

Retirement Dates:
Him (NYS teacher pension – age 55 – early penalty (2028): $70k.
Him (NYS teacher pension - age 59 – full pension (2031): $96k
Her (NYS teacher pension – age 55 – full pension (2031): $100k

Current Mortgage: $270k (2.99% - final payment in 2035)
House Appraisal: $750k

Instead of saving money in a 529 account, we decided years ago to save ourselves first. We have automated our retirement savings and increase our contributions each year. We don’t want to interrupt our retirement contributions. If we cash flow the college expenses, then we would need to stop our retirement contributions.

We would like to get some feedback on different approaches to prepare for this financial challenge (paying for college for two kids).

Could compounding at our savings rate outperform the interest rate of a Parent Plus loan, Heloc loan, etc.? Would it make sense to interrupt the compounding machine at this time?

P.S. Thanks to all the members in this forum for helping us achieve our small retirement savings. We are incredibly grateful for all the advice we received from the members in this community years ago.
If those pensions are CPI indexed then it helps to think of them, in portfolio terms, as 20 times (I could make a case for 24 times).

Ie 70k = $1.4m of investments in that year of retirement. You can check that in the SPIA market, but you won't be able to price a CPI-indexed SPIA.

I don't see anything wrong in suspending retirement account contributions whilst your kids are in undergrad. Or sharply reducing them. You will still have good retirement pensions and savings.

Find the right college for the kid. Unless it's a really top private university (Princeton, Harvard, Yale, Stanford) in particular or 4 year college (Pomona? Wellesley?) I am not sure it's worth the tuition given there are lower cost public options available to you.

Then try to make the finances work.
YeahBuddy
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Re: We saved nothing for college...BUT...

Post by YeahBuddy »

There's no rule that parents must fund their children's college education. A lot of college students pay their way through college or take out loans and pay them back. You stated you do not want to stop your retirement contributions and you don't have to. It looks like you have the ability to help them, so if you so desire, do that. Budget for it. I'd recommend starting with community college if they guarantee transfer credits will be accepted at the next school, or 4 years of state schools. We have nothing saved for college but I will probably help with expenses then help them pay off their loans later on, as gifts.
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ClevrChico
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Re: We saved nothing for college...BUT...

Post by ClevrChico »

Living at home and attending community college is a great option. Direct student loans will likely cover school expenses. A part-time job can cover living expenses. Some community colleges have partnerships with universities to obtain bachelor's and master's degrees onsite.
toomanysidehustles
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Re: We saved nothing for college...BUT...

Post by toomanysidehustles »

YeahBuddy wrote: Fri May 10, 2024 5:08 am There's no rule that parents must fund their children's college education. A lot of college students pay their way through college or take out loans and pay them back. You stated you do not want to stop your retirement contributions and you don't have to. It looks like you have the ability to help them, so if you so desire, do that. Budget for it. I'd recommend starting with community college if they guarantee transfer credits will be accepted at the next school, or 4 years of state schools. We have nothing saved for college but I will probably help with expenses then help them pay off their loans later on, as gifts.
This. Or maybe some kids decide they don't want to go to college. We saved in 529's for college and both of our kids will not go to college. :oops:
ThankYouJack
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Re: We saved nothing for college...BUT...

Post by ThankYouJack »

maestro1868 wrote: Thu May 09, 2024 7:20 pm We don’t want to interrupt our retirement contributions.
I might have missed it but is your retirement already fully (or over) funded? Seems that way with the pensions, SS, portfolio, home that will be paid off, and low expenses / spending.

If so, I would put the retirement savings on hold and help my kids out with college costs. Obviously a personal decision and depends on the family but I hope to help my kids while they're young and the financial support would be most beneficial. I might think of it as a better investment than index funds.
delamer
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Re: We saved nothing for college...BUT...

Post by delamer »

maestro1868 wrote: Thu May 09, 2024 9:51 pm
delamer wrote: Thu May 09, 2024 9:03 pm The real question is how much will you need over-and-above your pensions (and any Social Security for which you are eligible) to support yourselves in retirement?

You decided to prioritize saving for retirement, which is following standard financial advice.

But have you calculated how large you nest egg needs to be? That should tell you whether you have any leeway to redirect some of your retirement savings toward college.

If you don’t, then working longer is am option.
In retirement, our plan is to live a very simple life. My truck has almost 200k and it still has a cassette deck. :D
That you want to live your definition of a simple life isn’t illuminating. Nor is knowing that you have a truck with 200,000 miles on it.

The questions are very specific — 1) what are your expected expenses in retirement and 2) how much of those expenses (dollar-wise) will be covered by your pensions and any SS?

Those two pieces of information will tell you how big a retirement nest egg you need.
One thing that humbles me deeply is to see that human genius has its limits while human stupidity does not. - Alexandre Dumas, fils
rogue_economist
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Re: We saved nothing for college...BUT...

Post by rogue_economist »

YeahBuddy wrote: Fri May 10, 2024 5:08 am There's no rule that parents must fund their children's college education. A lot of college students pay their way through college or take out loans and pay them back. You stated you do not want to stop your retirement contributions and you don't have to. It looks like you have the ability to help them, so if you so desire, do that. Budget for it. I'd recommend starting with community college if they guarantee transfer credits will be accepted at the next school, or 4 years of state schools. We have nothing saved for college but I will probably help with expenses then help them pay off their loans later on, as gifts.
Is it the law that you help pay for your kids college? No. But should you? Yes you should. Assuming college is right for them it dramatically improves their lifetime earnings potential, quality of life, etc.
Hardly any college students are paying their way through these days, that is more of a mythology than a reality. Those without any help that cannot get aid have to borrow and try to pay off the debt, and that has become a well known issue.
If someone's parents contributed nothing to their college education or pushed them into community college when they were capable of better things I would hardly blame them if they did the bare minimum for their parents in their old age. What goes around comes around.
Society grows great when old men plant trees whose shade they shall never sit in
Pops1860
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Re: We saved nothing for college...BUT...

Post by Pops1860 »

Please stay on focus addressing OP's question (finances and retirement savings).

Unnecessary commentary about the appropriateness of parents financially supporting their children's education are off topic, and risk derailing/locking this thread.

Suggesting considering college expenses as a financial factor in OP's situation is appropriate; going beyond that is unnecessary.

Thanks. Moderator Pops1860
The power of accurate observation is often called cynicism by those who do not have it. ~George Bernard Shaw
Hebell
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Re: We saved nothing for college...BUT...

Post by Hebell »

Make very sure when you get a merit scholarship from a college, that it says they won't reduce that merit scholarship by any other scholarships that you win.

My daughter got such a letter. Then in a later year as she won more scholarships they wanted to withhold the same amount from the merit scholarship.

We actually had to almost threaten legal action, and send them copies of the letter that they sent to us saying that her merit award would not be reduced over the four years based on any other awards we might get.

Don't think that they won't try to claw back a merit scholarship if they think you have another source of income. They really don't like seeing students get full freight, is the feeling I got.

While I don't remember the exact numbers, I know that she won 20% of the scholarships she applied for. So the university probably wasn't used to seeing incoming receipts from 12 different organizations.
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MrBobcat
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Re: We saved nothing for college...BUT...

Post by MrBobcat »

We didn't save a dime for our kids college. We had 3 kids go and graduate college while we were between ages 41-49. Our daughter, who had some scholarships but not a lot was able to get subsidized student loans, so we took those to supplement what we could help her with. Our older son got a 4 year tuition paid scholarship and between his summer jobs and our help got out with out any debt. Our younger son not only got a 4 year tuition paid scholarship, he got an additional 4 year/$6,000 per year scholarship that could help out with room/board/books, he also got out w/o any debt. Daughter ended up with $20k of subsidized loans (she also took 5 years). We made her pay on the loans for 1 year, by that time kid 2 had graduated so we had more cash flow and we paid her loans off in full for her birthday. During this time my wife got a better paying job so all her extra pay went towards helping the kids out with school.

We always saved for retirement but by no means maxed it out. Once the kids got out of college we paid off the house and supercharged our savings... There's more than one road to Rome.
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