DaftInvestor wrote: ↑
Tue May 22, 2018 12:57 pm
CnC wrote: ↑
Tue May 22, 2018 12:41 pm
Realistically though just how many people make enough to fund one? I just see very very little use in doing one.
You are talking about needing a minimum saving amount of 48,000 before it makes sense to save in one.
On top of that many people who are able to save 48,000 per year may have after tax 401k options that will bump it into the 70,000 a year range HSA's also will move that needle up.
Then there is always the need for money in a taxable account to help balance taxes in retirement and help fund a early separation from your employer.
Perhaps after that full ±100,000 is saved per year then and only then would a 529 make sense.
How do you calculate needing a minimum save of 48,000?
Futhermore - how do you figure only after saving $100,000 a year does it make sense?
Are their some additional tax advantaged savings I'm not familiar with?
For me - my total tax advantaged savings:
$18,500 401K + $5,500 Roth-backdoor IRA + $10,000 ibonds (yes - realize I could get another $5K in iBonds if I over-pay taxes). And many don't think the low rate of iBonds are worth the trouble so are left with only the first two.
I also worked at a company for a period of time that had NO 401K account - so my tax-advantaged space was even lower.
Are you assuming everyone is married with working spouses or that everyone has access to an HSA or is there something else I am missing?
I don't have an HSA available to me unless I don't want to give up my low-deductible corporate paid benefits (which are really good). It would cost me many thousands in insurance to get a little HSA space so I don't bother.
I couldn't help but notice that you started one thread talking about "why people think they will be in a lower tax bracket when in retirement" then in a post above you stated that you hope to retire before college and pay less taxes and thus the 529 won't matter to you. Seems like you are changing your circumstances to make your arguments.
Well yes I am using my situation as an example and assuming that if you have children and you are saving for college you are married and both working.
That is 18,500 x2 + 5500 x 2 that is where I get the number. It certainly could be different but I am not familiar with many single parents who have the 24,000 retirement bucket filled each year and have money to spare. Untill everyone is filling their own retirement buckets there is no reason to put money in a 529. Buckets may vary but generally if you make enough money to fill yours you won't have a ton left over to invest in hope and chance.
Our personal situation is that we have a total of over 70k of tax advantaged space. We can not yet hit that number but we are actively trying. Once we hit that number we will try to save a reasonable number in our brokerage account in case our fortunes turn sour.
If we manage to save 70k+ a year we will be looking very seriously at retiring early when our kids are still in college rather than run into the tax issues I was referring to in the other thread.
Hopefully early enough that we will be able to fund our kids college expenses out of our taxable account for a relatively modest sum. If I choose to do this I likely won't do any Roth conversions for those years.
I have wondered what having no taxable income would do to financial aid prospects.
Or the world markets may melt down for the next 100 years and none of it will matter.
Please show one single example of where or how I contradicted myself before attempting to accuse me of something.
I was simply using my situation as an example of why we would need to make a whole lot more money before we would even consider a 529.
In case you were actually asking and didn't know all the tax advantaged space and not trying to make a point. Tax advantaged space DW 55k for 401k 5.5k for IRA, DH 18.5k for 457, 5.5k IRA, 7k VAC, 4k pension all adds up to 95.5k we can't fill this full amount yet but even after we do we will need to put a reasonable amount into brokerage incase we run into some issue while we are young.