how much is enough for 529 accounts
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Anonymous
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Child #1 is starting high school in the fall and his 529 is worth $166K.
Child #2 is starting 6th grade in the fall and her 529 is worth $112K. Both kids are academic high achievers and at least as of now I expect they will attend 4 year private colleges. Household income is about $165K. Should we quit funding these accounts now (except to get the tax deduction) and put more money into retirement savings? |
Anonymous
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Private schools are a waste of money, even for "high achievers." Go public undergrad and private (or top public) grad school.
-Signed, a former top 10 law school admissions officer |
Anonymous
| That was not my question. |
Anonymous
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Well then, your going to need $240k minimum in today's money, so no you don't have enough.
Current (today's) COA (cost of attendance, inducing room, board, books, tuition) is $60k+ at many private schools. Keep saving. |
Anonymous
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Taken from Duke's website
2014-2015 ESTIMATED COST OF ATTENDANCE Tuition and Fees $47,488 Room $6,526 Board $6,050 Books and Personal Expenses $3,466 Estimated Cost of Attendance $63,530 |
Anonymous
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First, it depends on how well you've saved for retirement. If you have haven't done much, that's a real problem. You have a pretty large amount tucked away in the 529s already.
Second, how much can you afford to pay out of pocket every year? In our case, we're paying $35k in private school tuition out of current earnings to there's not much need to save more than the difference between college and high school (about $25k/year or $100k total). |
Anonymous
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OP here. We are savers, so there is quite a bit tucked away for retirement, but obviously saving more would be better.
I think the short answer is that we are not done saving for college, but perhaps we should be minimizing our contributions to the 529s, which have limits on how the money can be spent, and putting more into general savings that can be used for a variety of purposes. It is, after all, quite possible that one kid or the other will not go to a very high priced school. Does that sound right? |
Anonymous
| Fund till they go to college. We stopped at 200K, might not be enough or might be a little too much. If not enough, you pay the difference. If too much, then you have some for grad school or you can use it on the next kid. |
Anonymous
| Depends on how much disposable income you have...remember, there are several ways to pay for college. You can't say that about retirement. |
Anonymous
| OP again. It seems that there is a down side to overfunding the 529. If we continue saving for college using another savings vehicle, and don't put quite so much in the 529, is there some benefit we are missing out on? We would obviously fund the 529 enough each year to get the tax benefit. |
Anonymous
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We funded our children's 529's at the level of expected costs for the average in state public school. Then we put more into a fund that we designated as "college", but isn't as far as taxes are concerned up to the cost of an out of state public college for both children. If they want to go private then will have to make up the rest in merit aid.
Retirement savings should come before college savings. |
Anonymous
This is what we did. The difference for us is, we only saved $50k in the 529 and then started saving that money in an account that can be used for college or retirement. |
Anonymous
Yes. Continue to save but stop saving in dedicated 529s. Congratulations on doing so well by your kids! |
Anonymous
This is such a racket. Obscene tuition rates. |
Anonymous
| Do you already have a Roth IRA? If not, make sure you put $11k per year into that ($5500 for you and spouse each). That money can be used for retirement and grows tax free, but contributions can be taken out at any time for any reason including college, so it's there if you need it. |