Is your college savings plan on track to meet the cost of the best education choices for your children or grandchildren?
What if your child or grandchild gets accepted to attend that top university they’ve been dreaming of going to? Education is important, but the cost of college has skyrocketed over the past 20 years, with costs rising nearly three times the rate of inflation! Nearly all good-paying jobs require a college degree, yet your children and grandchildren face debt loads that have never been seen before in history.
The good news is that financial planning options exist to help you prepare for the heavy costs of higher education. One such option is a college 529 plan, named for the section of the Internal Revenue Code that authorizes them and their tax benefits. Some of the main benefits of 529 plans are tax-free withdrawals for “qualified expenses,” like tuition, room and board, books and computers, etc. Other highlights include:
- Earnings are exempt from federal tax, and in most cases, state tax, as long as the withdrawals are used for eligible expenses
- You keep control (as the donor) of the money in the account instead of transferring control to the student at a specific age
- There are no income limits that would prevent contributions
Aaron’s dad had taken money to pay for Aaron’s college expenses and is now facing working an additional 4 to 5 years to be able to comfortably fund his retirement. Aaron just had his first child and was determined that he too would pay for her college expenses. He just didn’t want to do it the same way his dad had.
Through The Financial Life Inspection®, Pacific Capital was able to show that by saving just $50/month, Aaron would be able to send his daughter to any number of colleges. After opening a 529 account and setting up automatic payments, he’s now on track to send his daughter to college without dipping into any of his retirement money.
Back to the original question: Is your college savings plan on track to meet the cost of the best education choices for your children or grandchildren?
If you can’t answer this question confidently, then we should talk. Through The Financial Life Inspection®, Pacific Capital will help make sure your college savings plan is on track to fund the cost of your family’s education. Contact us today to get started.