Saving for college today has enough variables to make your head spin. My daughter is 1 ½ years old. Will the college costs keep compounding at the same insanely high rate? What will financial aid look like in 17 years? Which accounts do I want the money in to best position her for that? Will she even go to college?
With all of that swirling around, my plan is remarkably simple. Pray that the higher education bubble bursts before she gets there but save as if it won’t. Thankfully I’m off to a good start with college savings because we repurposed money we had socked away for grad school that Charnelle and I never used.
I do want to avoid having too much in a 529 plan in case my daughter doesn’t go to college or she attends a less expensive state school. That means eventually I will be saving some in taxable accounts just to avoid the potential 10% penalty on growth for non-education withdrawals. That’s not a problem today. Just something to keep an eye on as the years get by.
For now, I’m socking money away in that 529 and enjoying the tax-free growth. There is enough flexibility in the withdrawal rules that I am confident I’ll avoid a tax penalty.
Do you have a plan for your child’s college education? I’m here to help.
Legal Disclaimer: These posts do not constitute an offer or recommendation to buy or sell any securities or instruments or to participate in any particular investment or trading strategy. They are for informational purposes only. CTW gathers its data from sources it considers reliable. However, CTW makes no express or implied warranties regarding the accuracy of this information or any opinions expressed by the author and may update or change them without prior notification.
About the Author: John O’Connor
John has more than ten years experience as an Investment Advisor. He focuses on devising and maintaining portfolios that meet individuals’ needs, investment research, and investment strategy. John has been recognized as a “FIVE STAR wealth manager” by Twin Cities Business Magazine 2016-2020.