Can someone walk me through this? College and retirement savings Q

[Anonymous]

Our oldest child is starting college in two years. Up until two years ago, we weren’t earning enough to save much beyond 10-15 percent to retirement. We always put $ into a 529 for each kid but I’m talking $150 per month. We currently max retirement savings and save $500/kid in each 529.

Anyway, we now have enough in our eldest’s 529 to pay for a year at a public with DC tag, if we’re lucky. DH will turn 59 the year our kid starts college. This is just background.

In making up the shortfall, would it be terrible to take some money out of DH’s 401k? Not as a loan, but as a permitted withdrawal after he turns 59.5? Assume DH won’t retire until at least 67, and that his workplace permits 401k withdrawals by current employees. This would be probably 10-15k per year for 4 years, and would let us avoid taking out any loans for DC’s college. We’re on track currently to have 5 million saved in our 401ks by the time I retire in 20 years (I’m 47) but obviously this would affect that. Just trying to think things through and I’d appreciate any advice. Please, no “why didn’t you save more???” comments. We have truly done what we could.

[Anonymous]

Why wouldn't you just stop or lower contributions at that time?

[Anonymous]

Now that I read my own question, I realize it probably makes more sense for us to cut down our retirement savings for those years by that amount (we’re now saving about 60k/year in our 401ks) and just cash flow the difference.

[Anonymous]

Anonymous wrote:Why wouldn't you just stop or lower contributions at that time?

Ha! See my comment above. Yes, that probably makes more sense. Though doesn’t tuition need to be paid in chunks, not doled out? Maybe could use the 529 and then refill it for the coming year.

[Anonymous]

Also I would never assume someone (in you case both of you) will work until 67 as a plan for anything. Death or disability or exhaustion or losing his job could mess that up real quick.

Clarifying question: is he 57 now/59 when first kid goes or did you mean to say second or third kid at that age?

[Anonymous]

Stop the contributions and /or take loans. Why bother touching what's already in retirement.
Pay off the loans once they start coming due. Let the retirement grow til then.
The kid can pay the loans with your help.

[Anonymous]

Anonymous wrote:Also I would never assume someone (in you case both of you) will work until 67 as a plan for anything. Death or disability or exhaustion or losing his job could mess that up real quick.

Clarifying question: is he 57 now/59 when first kid goes or did you mean to say second or third kid at that age?

He’s 57 now and will be 59 when kid #1 starts college.

[Anonymous]

Anonymous wrote:Also I would never assume someone (in you case both of you) will work until 67 as a plan for anything. Death or disability or exhaustion or losing his job could mess that up real quick.

Clarifying question: is he 57 now/59 when first kid goes or did you mean to say second or third kid at that age?

+1 Ageism is real.

I would continue to contribute to 401k for the tax deduction, and then pull out $ to pay for college when your DH is 59.5.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Also I would never assume someone (in you case both of you) will work until 67 as a plan for anything. Death or disability or exhaustion or losing his job could mess that up real quick.

Clarifying question: is he 57 now/59 when first kid goes or did you mean to say second or third kid at that age?

+1 Ageism is real.

I would continue to contribute to 401k for the tax deduction, and then pull out $ to pay for college when your DH is 59.5.

Op has to pay tax on that money so not sure any difference from tax standpoint

[Anonymous]

Don't forget that the kids should be contributing too! Your kiddos who are over 16 should be working at least part time. Have them save 1/2 for college. That could be $5k a year!

[Anonymous]

Plan to take out student loans. You can debt finance college, you can't debt finance retirement.

[Anonymous]

Anonymous wrote:Also I would never assume someone (in you case both of you) will work until 67 as a plan for anything. Death or disability or exhaustion or losing his job could mess that up real quick.

Clarifying question: is he 57 now/59 when first kid goes or did you mean to say second or third kid at that age?

This. The best advice I got from someone when I was young was to plan to work until 55. After 55 all bets are off.

[Anonymous]

You need to do some retirement projections. Maybe go to Bogleheads for a portfolio review. What is the $5mil based on? I assume that's future dollars. What about in real dollars? How much is growth of current savings versus future contributions? How much do you plan to spend in retirement? This $5mil seems high if you say you haven't saved much, but regardless want matters is how it compares to your estimated spending after Social Security. Bogleheads can help with how to figure all that out.

[Anonymous]

Yes, it would be terrible.
Your kid can get a loan for college. You cannot get a loan to retire.

[Anonymous]

Anonymous wrote:Yes, it would be terrible.
Your kid can get a loan for college. You cannot get a loan to retire.

they are going to probably have $5mil at retirement, per OP.

But, since anything can happen between now and retirement (ageism), it might be a good idea to take out the loans, then pay it off when it starts to become due. If you don't have the money for whatever reason, your kid can start paying the loan.

If you are unsure about all of this, don't pick an expensive college.