Hi B-H!
I got a surprise bit of good news, and I think we are done saving for college (or close to it). I thought you’d have helpful perspective.
Our 3 kids are 6, 4, and 2 (and we’re not having any more). We’ve been contributing heavily towards 529s since they were born, and now they have about $450K in total between them.
Yesterday, my parents were visiting, and they mentioned they also have been saving for the grandkids at $10K/yr since birth and will continue to do that as long as they can. They’re in their 70s though both work independently in fields where they can keep working as long as they’d like, plus they have significant assets and are in excellent health.
Our goal for the kids is to be able to fund private 4 year college for each of them. This is almost certainly too much given the many paths in life, but I figure it can be used for grad school or assigned to the next generation. I estimate that future cost at about $550K/kid (5% growth rate using present room and board for my alma mater).
Doing some rough math, if we assume a 5% growth rate on what we’ve saved plus continued contributions from my parents (and that growing), you end close to that $550K/kid figure. Granted, they could stop contributing, but also the market could return more than 5%. And we could always cash flow part of the cost, or use other, less tax-advantaged assets to fund school, or a kid gets an scholarship, etc. etc. etc.
We are already maxing our tax-advantaged retirement accounts, so this isn’t taking away from that — money not going into a 529 would go into a taxable brokerage.
College for my small humans feels like an unknown of near-infinite expense, but there has to be a limit beyond which it’s irrational to keep saving. My plan breaks if college tuition goes up 10% a year for the next 12-16 years and the market returns only 3%, but I expect I have larger problems in that scenario.
Overall stats if helpful: late 30s, VHCOL area, $600K-1MM/yr income, ~$5MM NW
Thanks for your advice!
I got a surprise bit of good news, and I think we are done saving for college (or close to it). I thought you’d have helpful perspective.
Our 3 kids are 6, 4, and 2 (and we’re not having any more). We’ve been contributing heavily towards 529s since they were born, and now they have about $450K in total between them.
Yesterday, my parents were visiting, and they mentioned they also have been saving for the grandkids at $10K/yr since birth and will continue to do that as long as they can. They’re in their 70s though both work independently in fields where they can keep working as long as they’d like, plus they have significant assets and are in excellent health.
Our goal for the kids is to be able to fund private 4 year college for each of them. This is almost certainly too much given the many paths in life, but I figure it can be used for grad school or assigned to the next generation. I estimate that future cost at about $550K/kid (5% growth rate using present room and board for my alma mater).
Doing some rough math, if we assume a 5% growth rate on what we’ve saved plus continued contributions from my parents (and that growing), you end close to that $550K/kid figure. Granted, they could stop contributing, but also the market could return more than 5%. And we could always cash flow part of the cost, or use other, less tax-advantaged assets to fund school, or a kid gets an scholarship, etc. etc. etc.
We are already maxing our tax-advantaged retirement accounts, so this isn’t taking away from that — money not going into a 529 would go into a taxable brokerage.
College for my small humans feels like an unknown of near-infinite expense, but there has to be a limit beyond which it’s irrational to keep saving. My plan breaks if college tuition goes up 10% a year for the next 12-16 years and the market returns only 3%, but I expect I have larger problems in that scenario.
Overall stats if helpful: late 30s, VHCOL area, $600K-1MM/yr income, ~$5MM NW
Thanks for your advice!
Statistics: Posted by topofthebellcurve — Sun Jul 14, 2024 6:07 pm — Replies 6 — Views 776