A Lesson in Saving for College

December 23, 2004 08:02 AM

A Lesson in Saving for College

Excerpt: Thanks to obscure savings-plan rules, the best way to finance your kids' education may be to sock away money in your own retirement account

Thanks to obscure savings-plan rules, the best way to finance your kids' education may be to sock away money in your own retirement account
One of the toughest financial dilemmas parents can face is how to provide for both their children's college education as well as their own golden years. All too often, parents stash the bulk -- if not all -- of their savings in college accounts, say many financial planners.

"Parents take a look at a newborn infant, and they start saying: 'We have to do everything we can to help this child,'" says Tom Muldowney, a financial planner in Rockford, Ill. So right away they start putting money into a college account, either cutting back on or postponing building their retirement savings. As a result "people who save aggressively for their kids' education often do not have enough money for themselves at retirement," he says.

With annual college costs routinely running anywhere from $10,000 to $25,000 and more, the push to save for education is understandable. But it could backfire. According to Muldowney, what many parents often don't realize is that they may be able to provide more for their children's college education by saving money in retirement accounts, rather than putting it into education accounts. The rationale lies in the fine print of the rules that govern retirement- and education-funding systems and accounts.

READ FULL STORY ...

Is Yale a Waste of Money? (December 24, 2004)

Wouldn't it be neat if, instead of a diploma costing $160,000, you could buy a $16,000 certificate saying you got in? Someday the university education system will simply price itself out of business and save us all a lot of grief. In the meantime we ...

An Expensive Education (December 24, 2004)

Politicians and regulators are steaming over brokers' dominance of the 529 college savings plan market, and scheming to find ways to reduce their role. Perhaps daunted by all the options offered--all 50 U.S. states and the District of Columbia offer plans with varying investment choices ...

Read all 10 posts in the same category of College:

Flaws Showing in 529 Plans for College Savings - Feb 20, 2005
Utah, Alaska Among Top 529 Plans - Feb 13, 2005
Start Saving For College ASAP, If You Can - Feb 05, 2005
Online Banks Are Boosting Yields Online Banks Are Boosting Yields - Jan 15, 2005
Financial-Aid Rules Sow Confusion for 529 Owners - Jan 15, 2005
NASD Says Do Your Homework On 529 Plans - Dec 24, 2004
Pay Now, Learn Later - Dec 24, 2004
Is Yale a Waste of Money? - Dec 24, 2004
An Expensive Education - Dec 24, 2004

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