College Planning Upper Middle Class

[Anonymous]

OP, we have your income, same age, $2.4 million in retirement funds and about $200,000 in 529s. We will also have gov pensions. So less than you, but we are not frugal and have not been maxing our retirement contributions for some years now, so your numbers make sense to me. We believe in fully funding our 2 kids’ education, as long as we can afford it and still have decent funds for retirement. That could mean $300,000 for undergrad and $300,000 to $400,000 for professional school, each. If the stock market keeps going up, that may be possible. If it doesn’t, and it likely won’t, we’ll reassess. The kids are reasonable and sensible. We’ll make decisions as a family when the time comes. My parents did the same for me and my siblings, and it worked out. We worked hard, even though we paid for nothing, and we would of course take care of my parents if they ever needed it.

[Anonymous]

+1 on the numbers seeming reasonable.
We're in our 40s, have 2 kids, 1.5 million in retirement, and about 100k in college savings and have never had a household income over 130k in DC area and many years with less. And one of us took time to get a PhD (both our careers are for love not money) and the other has taken off time for caregiving--we had no inheritance but educations were funded on merit aid. Seems like it would be relatively easy to amass what they have with more than double our HHI if they were frugal.

To OP's point--I wouldn't commit to paying all of graduate school. Also, I don't think you get financial aid for funding grad school as a parent--so it wouldn't impact FA for younger child. I could be wrong for CSS--not quite sure.

[Anonymous]

I think the people who are disbelieving share a lot in common with the people who can barely make ends meet on $300k. Believe it or not, there are people who don’t feel deprived if they are living a life without international vacations, private school, second homes, etc. They may also not even see the value in daily visits to Starbucks, cable plus multiple streaming services, upgrading cars and phones after only 2-3 years, eating out/getting takeout multiple times a week, wearing the latest fashions, etc. I’m not talking about eating rice and beans every day, but if one is careful with their money, buying things only when they go on sale, and living what some might consider a “boring” life, they can manage to save half their income while not feeling deprived. It’s all relative, and we all make choices.

[Anonymous]

I think it's interesting OP hasn't come back to tell us how she was able to save so much money so early in her working life in order to hit the magic compounding rates to make her figures work. Most posters are usually upfront about their occupations and strategies but she only keeps saying to look at compounding calculators, but most of us know these calculators rarely ever work out in real life. I wonder if it's because she knows the more information she gives the more easily it is to cast doubts on her claims. I suppose the numbers can work but she and her family would have to be living so well below their means. She mentioned contributing 40k a year for the first ten years, but even at 20k a person that was way above the contribution limits in those days, and on a presumably much lower income. Did she not have to save for a down payment too? Make monthly mortgage payments? Even the other posters with comparable incomes still come out about a million less than OP is claiming.

[Anonymous]

Anonymous wrote:I think the people who are disbelieving share a lot in common with the people who can barely make ends meet on $300k. Believe it or not, there are people who don’t feel deprived if they are living a life without international vacations, private school, second homes, etc. They may also not even see the value in daily visits to Starbucks, cable plus multiple streaming services, upgrading cars and phones after only 2-3 years, eating out/getting takeout multiple times a week, wearing the latest fashions, etc. I’m not talking about eating rice and beans every day, but if one is careful with their money, buying things only when they go on sale, and living what some might consider a “boring” life, they can manage to save half their income while not feeling deprived. It’s all relative, and we all make choices.

It's not about making ends meet on 300k. I fully believe OP would be able to accumulate $3M in retirement and 400k+ college savings on a 275k income. But she couldn't have been making 275k every year for her entire working life. And even a modest life for a family of four in the DMV isn't cheap. Housing, taxes, commuting costs, cars, child care, child expenses, it all adds up and that's without private schools and shopping at WF and fancy vacations. She also doesn't mention any home equity or other assets, which one would think someone who's been such an aggressive saver from the get go would also have and mention. It's altogether a weird set of information to put forward and doesn't play off each other coherently.

[Anonymous]

Anonymous wrote:OP, we have your income, same age, $2.4 million in retirement funds and about $200,000 in 529s. We will also have gov pensions. So less than you, but we are not frugal and have not been maxing our retirement contributions for some years now, so your numbers make sense to me. We believe in fully funding our 2 kids’ education, as long as we can afford it and still have decent funds for retirement. That could mean $300,000 for undergrad and $300,000 to $400,000 for professional school, each. If the stock market keeps going up, that may be possible. If it doesn’t, and it likely won’t, we’ll reassess. The kids are reasonable and sensible. We’ll make decisions as a family when the time comes. My parents did the same for me and my siblings, and it worked out. We worked hard, even though we paid for nothing, and we would of course take care of my parents if they ever needed it.

I think this family benefited from some transfers of income from the grandparent generation. It is great to be in that position.

[Anonymous]

Guys I give up. You either believe me or don't. My circumstances weren't exactly as I described in the hypothetical but I just wanted to show a realistic example of how it was possible. I'm not going back 25 years or more and describing in DETAIL. Frankly I don't remember what I did exactly 25 years ago. I mentioned 401k's first because that's where most of our assets are. My husband and I have always been excellent SAVERS and have done everything possible to max our savings 401ks/IRAs and then on to 529 plans too once we had kids.

I guess I should feel flattered about my financial future that so many people feel that it is impossible. And yes our house is paid off too no car debt either. Of course now I'm probably considered too outrageous to have this happened.

Since I can't get real advice here- I'm just planning on saving more towards DD's graduate/medical school plans. Worse case, the funds will transfer to grandkids someday.

[Anonymous]

One more thing OP again.

If I help my daughter and she graduates debt free hopefully I'll help her start this cycle again so 20 years from now people will think she's outrageously rich given her income :/

[Anonymous]

OP we make half as much as you, with one kid. I know you have two, but especially since you have no mortgage, can't you just use one of your incomes (or half of total income) to devote to tution for whatever years your kids need it? Seems with what you've saved you would have no problem funding college and grad school that way. You can also borrow against retirement savings for college I believe. I don't think you need to save more per se now.

[Anonymous]

I'm a PP who wrote in with a similar amount saved. I didn't get a boost from my parents except for undergrad fully paid, but I got lucky with some company stocks in my first job out of school. I was able to use that to invest, including some residential and commercial real estate, in addition to my day job and here we are.

[Anonymous]

Anonymous wrote:

Anonymous wrote:OP, we have your income, same age, $2.4 million in retirement funds and about $200,000 in 529s. We will also have gov pensions. So less than you, but we are not frugal and have not been maxing our retirement contributions for some years now, so your numbers make sense to me. We believe in fully funding our 2 kids’ education, as long as we can afford it and still have decent funds for retirement. That could mean $300,000 for undergrad and $300,000 to $400,000 for professional school, each. If the stock market keeps going up, that may be possible. If it doesn’t, and it likely won’t, we’ll reassess. The kids are reasonable and sensible. We’ll make decisions as a family when the time comes. My parents did the same for me and my siblings, and it worked out. We worked hard, even though we paid for nothing, and we would of course take care of my parents if they ever needed it.

I think this family benefited from some transfers of income from the grandparent generation. It is great to be in that position.

Well, this is true to extent my parents paid for undergrad and professional school so no debt, but not otherwise. Most of our money is in the retirement funds, so obviously that’s not parents, it’s the magic of compounding. Same is true for the 529’s, that’s all our money— first we contributed $2500 per kid per year, then $5000.

[Anonymous]

These examples of how we did it coming up make me laugh. The tuition today is exorbitant compared to what we paid. I cannot see saddling a "child" with that much debt. They have no idea of what that will mean to their lives. Be the grown up. Either it's your sacrifice or be truthful about what you can afford.

[Anonymous]

NP. One thing the naysayers here may not realize, if they haven’t been in DC that long...we bought our first house in Arlington in 1996. It was in a nice neighborhood, had four bedrooms, and was a reasonable size for raising a family. Price paid: $300,000. And this was pretty typical around that time. Prices since have skyrocketed.

[Anonymous]

OP again...

So I've been thinking about this a lot.

I looked to see exactly what our contributions to date were and they were a little higher than I had written in my OP due to compounding. I didn't check my statements before writing my OP. It just kind of hit me a few nights ago with DD told me that she wanted some sort of medical career (most likely doctor). Before people give me a hard time about taking it seriously, DD is a strong student in a very selective HS program. She's in one of the select programs at either TJ, RM IB, Blair or PHS. I just wrote checks for $10K each to their college funds last night ($452K). We contributed $15K earlier this year.

I just ran the numbers and this is what I feel comfortable doing (gulp):

*Paying $50K each for 4 year undergrad (2 Kids)
*Paying $70K each for 4 year graduate/medical school (2 kids)

I can do this by assuming that we will be paying $30K per year out of pocket for schooling for the next 12 years and using the balance from their 529 plans. The kids are 4 school years apart. I'm assuming only 3% growth because I've moved most of their college fund money to the "safe" investments. We've had a great run up in the stock market and I wanted to lock in my gains which I did earlier this year. I was hoping that we could be a little more frivolous with our spending instead. Oh well.

It's probably unlikely that both kids will want to become medical doctors but likely that they will both want to go to some sort of graduate school. I'm very much a planner and I guess I would feel awful if they both wanted to be doctors/were accepted to medical school and I felt like I couldn't pay or that I felt like it strained our financial resources too much.

For the last 16 years, I had always planned on paying for undergraduate school and had never given much thought to graduate school. My husband and I both work in fields were tuition remission is common for graduate school. My husband and did not get to where we are by having the attitude that so many people do- we will figure it out when it comes. That attitude drives me bonkers.

[Anonymous]

Anonymous wrote:These examples of how we did it coming up make me laugh. The tuition today is exorbitant compared to what we paid. I cannot see saddling a "child" with that much debt. They have no idea of what that will mean to their lives. Be the grown up. Either it's your sacrifice or be truthful about what you can afford.

OP here agree so much. $200K to a 22 year old means nothing when all he or she has to do is sign a document to pay it back.