For many, our children’s high school graduation is just around the corner and then they’re off to college. And we ask ourselves–where did the years go by? Besides seeing an empty nest, parents are also seeing empty pockets; thus, jeopardizing their own retirement. The reason is the cost of college tuition is continuously rising. Reports reveal a shocking 129% increase from the average tuition in 1988 being $15,160 to $34,740 for the 2017-2018 school year.1 With the rise in numbers, it can become a financial burden for parents who aren’t prepared. Here are a few things to consider:
- Create a budget for college. Because there’s a wide variation in cost among institutions; it’ll be beneficial to research tuition and expenses at all the different schools your children are interested in to come up with a feasible budget.
- Open a tax-advantaged 529 College Savings Account. A 529 college savings account is an investment vehicle for families to save and invest for college with tax-deferred earnings and tax-free distributions on education expenses.2
- Consider a Coverdell Education Savings Account. Another excellent college savings vehicle that grows tax-deferred and withdrawn tax-free; however, there is a maximum of $2,000 per student per year that can be contributed.3
- Research financial aid. Your children may receive financial aid or grants depending on certain circumstances. And if you’ve invested in their talents, they may qualify for scholarships.
- Invest in a life insurance policy. You never know what lies ahead. In the event of your death (or your significant other), the death benefit protection of a life insurance policy can be used towards their education.
When it comes to our children, we want nothing short of the best. College is an investment in our children’s future, and it pays to plan early. Give us a call. Together, let’s review the available options to help your children prepare for the next steps, all the while, protecting your retirement nest egg.
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This document is for educational purposes only and should not be construed as legal or tax advice. One should consult a legal or tax professional regarding their own personal situation. Any comments regarding safe and secure investments and guaranteed income streams refer only to fixed insurance products offered by an insurance company. They do not refer in any way to securities or investment advisory products Insurance policy applications are vetted through an underwriting process set forth by the issuing insurance company. Some applications may not be accepted based upon adverse underwriting results. Death benefit payouts are based upon the claims paying ability of the issuing insurance company.
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[1] https://www.cnbc.com/2017/11/29/how-much-college-tuition-has-increased-from-1988-to-2018.html
[2] https://www.sec.gov/reportspubs/investor-publications/investorpubsintro529htm.html
[3] https://www.irs.gov/taxtopics/tc310