college vs retirement (was: Character of a growing girl (middle school question))

In article ,
(Robyn Kozierok) wrote:

In article , Richard wrote:
Robyn Kozierok wrote:
: I believe it's usually possible to borrow from your retirement funds
: for education expenses, if necessary.

Yes, it is, though I would consider that close to a last resort.

I'm curious as to why you would consider it a last resort?

--Robyn


Speaking only for myself, as it is we are going to be potentially
somewhat strapped for retirement. Borrowing against our 401K or 403B
plans would leave us further strapped when we get old enough to retire.

While I think parents should do WHAT THEY CAN -- and even stretch a bit
-- to help cover their kids' college expenses, I don't think that
includes leaving yourself in poverty when you reach retirement age.
Social security may or may not be there at all, neither DH nor I work
for people that have any sort of pension plan other than the 401K and
403B, we don't even own our own home -- so we have to be thinking very
hard about $$ to retire, and if that means the kids have a harder time
financing college, then that's just the way it is.

meh
--
Children won't care how much you know until they know how much you care

I wrote:

If the link doesn't
work, search the archive for "college financing" under yesterday or
Sunday, November 30.

Sorry...the link *didn't* work for me. You'd have to go to www.seattletimes.com
if you want to search the archive for the article...I forgot to mention that
part.

beeswing

In article ,
Banty wrote:

In article , Elizabeth Gardner
says...

In article ,
(Robyn Kozierok) wrote:

In article , Richard wrote:
Robyn Kozierok wrote:
: I believe it's usually possible to borrow from your retirement funds
: for education expenses, if necessary.

Yes, it is, though I would consider that close to a last resort.

I'm curious as to why you would consider it a last resort?


Can't speak for Richard, but I'd consider it a last resort for the
reasons previously mentioned--that you can always borrow for education,
but you can't borrow for your living expenses in retirement.

That said, if you put all your resources into retirement savings (up to
whatever your contribution limits are, of course) with the express
intention of taking them back out again for education if necessary, I
don't see why that wouldn't work on some level. That way, you've got
the tax-free compounding and if another source of money crops up (say
today's active toddler turns into an athletically inclined 18-year-old
who gets a four-year free ride on the football team), you aren't stuck
with a large amount of savings earmarked for education and nothing else.

That may be true with good planning.

What needs to be accounted for, though (and one that many frankly wouldn't
well
account for) is that one subsequently needs to maintain enough income to pay
this loan back. And one's plans concerning maintaining this income won't
necessarily come to pass. For employment reasons, for health reasons. So
there's a significant risk against what is one's own sustenance the remainder
of
one's years on this planet. I'm not saying therefore it's wrong, but one
*really * has to have eyes open.

The thing is - education is an investment in the future of the grown child.
Which may for that reason be best financed from the income which comes from
that
investment - future income of said grown child. Continuing income and health
is
a much much surer bet for a 22 year old than it is for a 52 year old.



All very true. If you have to choose between the two, then obviously
the retirement money comes before the education fund. But if you were
going to stash money away for college anyway, it might be better off in
your IRA than in a savings plan earmarked for college. The only
advantage I can see to the latter is that people other than yourself
(like grandpa) can contribute to it also. We have a 529 plan, but it's
mostly so that we can collect bits of change here and there from our
uPromise activity.

dragonlady wrote:

In article ,
(Robyn Kozierok) wrote:

In article , Richard wrote:
Robyn Kozierok wrote:
: I believe it's usually possible to borrow from your retirement funds
: for education expenses, if necessary.

Yes, it is, though I would consider that close to a last resort.

I'm curious as to why you would consider it a last resort?

--Robyn


Speaking only for myself, as it is we are going to be potentially
somewhat strapped for retirement. Borrowing against our 401K or 403B
plans would leave us further strapped when we get old enough to retire.

While I think parents should do WHAT THEY CAN -- and even stretch a bit
-- to help cover their kids' college expenses, I don't think that
includes leaving yourself in poverty when you reach retirement age.
Social security may or may not be there at all, neither DH nor I work
for people that have any sort of pension plan other than the 401K and
403B, we don't even own our own home -- so we have to be thinking very
hard about $$ to retire, and if that means the kids have a harder time
financing college, then that's just the way it is.

meh


As for us, DH and I will be very close to retirement age when our son
reaches college age (and if he puts off college for any length of time,
we *will* be retirement age), so "borrowing" from our 401K or 403B isn't
viable.

We have a 529 investment plan for DD, and prepaid tuition plans for both
DD and DS (in this plan, tuition is guaranteed by the state). I know
people may balk at the fact that the children are limited to just a few
schools, and I had a problem with it until I realized I was limited to a
single college (the one where my father taught).

Jeanne

On Mon, 1 Dec 2003, Elizabeth Gardner wrote:
We have a 529 plan, but it's mostly so that we can collect bits of change
here and there from our uPromise activity.

Do you mind if I ask which one you went with? I haven't opened one of
theirs yet because it looks like the fees would eat up the little bit
of uPromise earnings we get.
--
Cheryl
Do the kids in your life have books they LOVE to read?
http://www.CarolinaKidsBooks.com

In article , Zarah says...

On Mon, 1 Dec 2003, Elizabeth Gardner wrote:
We have a 529 plan, but it's mostly so that we can collect bits of change
here and there from our uPromise activity.

Do you mind if I ask which one you went with? I haven't opened one of
theirs yet because it looks like the fees would eat up the little bit
of uPromise earnings we get.


For me uPromise woudn't add up to a heck of a lot, which is why I never
bothered. Only a few merchants I would normally buy from go have uPromise, and
to try to get more I'd have to actually lose money. One example - sometimes for
convenience I use the local Mobil station, and I could add to uPromise that way.
I'd do better if I were to use the cheaper gas station, and send the savings to
an ordinary college plan.

I suppose it doesnt' hurt if one is very aware not to spend more on items just
for uPromise, and is already budgeting well. Do it but don't let it fool you.
That is - continue to spend frugally, and reap what uPromise benefits one gets
in the course of that. But all in all I think it's more of a feel-good thing.

JMO,
Banty

In article ,
Elizabeth Gardner wrote:
All very true. If you have to choose between the two, then obviously
the retirement money comes before the education fund. But if you were
going to stash money away for college anyway, it might be better off in
your IRA than in a savings plan earmarked for college. The only
advantage I can see to the latter is that people other than yourself
(like grandpa) can contribute to it also. We have a 529 plan, but it's
mostly so that we can collect bits of change here and there from our
uPromise activity.

Actually, there are tax advantages to saving in the 529 plan that are
not present in a retirement account---if the student goes to college
before you reach retirement age there may be substantial penalties for
withdrawing the money early from a retirement account.

I expect to be retiring in 16 years, a couple of years after my son
finishes his bachelor's, assuming a normal schedule for both of us. I
would not want to acquire a lot of debt just before retiring, and I'd
rather my son did not start his career with crushing debts, so we've
been saving money every way we can, including the California "Golden
State Scholar" plan.

--
Kevin Karplus http://www.soe.ucsc.edu/~karplus
life member (LAB, Adventure Cycling, American Youth Hostels)
Effective Cycling Instructor #218-ck (lapsed)
Professor of Computer Engineering, University of California, Santa Cruz
Undergraduate and Graduate Director, Bioinformatics
Affiliations for identification only.

In article ,
Banty wrote:

In article , Zarah says...

On Mon, 1 Dec 2003, Elizabeth Gardner wrote:
We have a 529 plan, but it's mostly so that we can collect bits of change
here and there from our uPromise activity.

Do you mind if I ask which one you went with? I haven't opened one of
theirs yet because it looks like the fees would eat up the little bit
of uPromise earnings we get.


For me uPromise woudn't add up to a heck of a lot, which is why I never
bothered. Only a few merchants I would normally buy from go have uPromise,
and
to try to get more I'd have to actually lose money. One example - sometimes
for
convenience I use the local Mobil station, and I could add to uPromise that
way.
I'd do better if I were to use the cheaper gas station, and send the savings
to
an ordinary college plan.

I suppose it doesnt' hurt if one is very aware not to spend more on items
just
for uPromise, and is already budgeting well. Do it but don't let it fool
you.
That is - continue to spend frugally, and reap what uPromise benefits one
gets
in the course of that. But all in all I think it's more of a feel-good
thing.

JMO,
Banty


I agree--the key is to change your habits as little as possible, and
never do anything that will lose you money on a net basis. Actually,
the big payoff is if you get the uPromise Citicard, which pays in one
percent of your monthly card bill, up to a yearly maximum of $300. My
spouse and I each have one, and my dad recently got one, too, so that's
a potential $900 a year that we can amass without changing our habits at
all. Since we all pay off our balances each month, interest rates are
irrelevant, and there's no fee for the card. The way we use credit
cards is basically to put everything on them and exploit the float for
our own advantage, while giving the cc company as little as possible.
But that's our strategy no matter what cards we're using.

The other potential big payoff is in restaurants, which contribute 10
percent of the bill in most cases. I have to admit I don't know how
they can afford to do that, but the margins in the restaurant business
must be higher than I thought. It's not worth it if there aren't any
decent ones around, but fortunately our favorite Chinese takeout is on
the program and so are a couple of others that we like to go to.

The rest of it is just pocket change here and there. I don't buy things
I wouldn't buy otherwise, but I do choose my stores, to some degree, on
whether they do uPromise. A lot of my faves already do, but if I have
to choose between, say, Linens n Things and Bed Bath and Beyond, and one
of them does uPromise and the other doesn't, it's a no-brainer, since
they're otherwise pretty much indistinguishable.

As for how we picked the plan, there weren't as many choices when we
opened it as there are now, so we went with our state plan. But I may
revisit that decision at some point. All investments did so horribly
there for awhile that it didn't really make too much difference, but
with the market reviving, it might. I know there are places on the Web
that rate the 529 plans on performance and fees, though I don't have
links at the ready.