WiserAdvisor – Blog

Main Menu

  • Main
  • Financial Advisor Guide
  • Financial Planning
  • Retirement Planning
  • Education Planning
  • Investment Management
  • More
    • Personal Finance
    • Estate Planning
logo
I Want to Take Charge.
HELP ME FIND AND COMPARE TOP VETTED FINANCIAL ADVISORS IN MY AREA.

FINRA/SEC Registered Advisors

  Your Information is Safe and Secure

WiserAdvisor – Blog

  • Main
  • Financial Advisor Guide
  • Financial Planning
  • Retirement Planning
  • Education Planning
  • Investment Management
  • More
    • Personal Finance
    • Estate Planning
Education PlanningRetirement Planning
Home›Education Planning›Here’s How You Can Prepare for Your Children’s College Education While Saving for Early Retirement

Here’s How You Can Prepare for Your Children’s College Education While Saving for Early Retirement

By WiserAdvisor Insights
March 2, 2020
1269
0
Share:
College-Education-savings-plan

Early retirement and saving for your child’s education are two things that are extremely time-bound. Sometimes they can also occur at the same moment in your life, which can make it difficult to save for them both without falling short on other aspects of financial planning. Preparing for retirement is in itself one of the most crucial and arduous activities for most individuals. But when you make up your mind for early retirement, you also find yourself racing against time and working doubly hard to achieve your goals in a much smaller duration. Here’s what you need to know to not let it come in the way of your child’s education:

The conflict

Some experts argue that retirement should be the first priority for parents regardless of whether you choose to retire early or in your 60s or 70s. This is because your child is likely to have more alternatives ahead of them than you would in your retirement. Children can find scholarships or other forms of financial aid. They can also choose community college or not decide to go to college at all, but retirement, on the other hand, does not come with many options. When you retire early, you choose to exhaust the possibility of working or earning beyond a certain age. This leaves you with only a limited pool of savings, investments, and later Social Security benefits to keep you secure for the rest of your life.

Ways to save for a child’s education with early retirement

Here are some methods you can adopt

529 Savings Account

The tools to save for a child’s education remain the same despite your decision to retire early. One of the best forms of savings is to invest in a 529 account. However, in order to maximize the benefits of a 529 account in a short period of limit, here is what you can do:

  • Be quick: Open an account as soon as you can. Sometimes parents wait till kindergarten to start planning for their education expenses. However, with early retirement, everything on your agenda needs immediate attention. When you start saving right after your child is born, you can benefit more from the compound interest on your contributions.
  • Learn to prioritize: Sometimes, parents contribute to a 529 account along with saving in the bank. It is true that your savings in the bank can be used for covering many other expenses and a 529 account is typically limited to education-related costs (you have to pay tax along with a 10% penalty if you use it for other expenses). However, bank savings accounts earn a very low rate of interest per annum, whereas 529 accounts grow over the years along with the market. They can bring you more returns in the same amount of time.
  • Include family: It is common for grandparents, aunts, and uncles to bring gifts for your child on special occasions. So, a little help from them can help you in a great way if you wish to retire early. Talk to your family and ask them to make contributions to your child’s education expenses instead of bringing them presents. This may seem like a small contribution, but it can have a substantial impact over a period of many years. Grandparents can also open a separate 529 account for your child.

Roth IRA

Individual retirement accounts like a Roth IRA can also be used to cover the costs of education. If you do not want to open two separate accounts for retirement and higher education, you can stick to a Roth IRA. This is particularly helpful if your child decides to not attend college, in which case you can use the savings for your retirement expenses. However, on the other hand, if your child does decide to attend college, you can opt for early withdrawal. Roth IRAs can be used to cover qualified expenses without a penalty, but keep in mind that you will still have to pay income tax on your earnings.

Other Methods

There are also some other strategies that can help reduce the burden of college education expenses, along with saving for your early retirement.

  • Speak to your child: Although you will have to wait a while for your child to be of an appropriate age to begin a conversation about college, it can still help you decide how much you need to save. Sometimes children decide to not attend college despite their parent’s savings. In such a case, you can concentrate on your early retirement without having to worry about other things.
  • Look for financial aid: The Free Application for Federal Student Aid (FAFSA) has helped many students with their education expenses. You can see if your child qualifies for financial support by applying there.
  • Pick community college: Some students initially study at community colleges and then transfer to a private or public university. This helps save a lot of money and also gives them time to earn a good GPA or possible scholarships.
  • Aim for half: It is alright to not fund your child’s entire education. With early retirement, you may not have a lot of time on hand. You can aim to save half of it, and your child can pay the other half with a loan or scholarship.
  • Seek scholarships: If your child is good in sports or academics, they can apply to colleges and look out for sports scholarships, etc.

Some states offer tax benefits for a 529 account. This can be of great help. You can also settle at a place closer to your child’s college and save boarding expenses.

To sum it up

Early retirement requires every ounce of your energy and commitment to work hard for a limited number of years so you can have a relaxed and comfortable retirement. But regardless of when you retire, your responsibilities and duties are likely to remain the same. It becomes necessary to prioritize in such situations. Providing for your children is important for all parents, but you must understand that your child is likely to have more ways than one to lead a successful life. However, after retirement, your income avenues and savings funds will only decrease with each passing day.

Are you planning to retire early and need help in saving for your child’s education? Get in touch with financial advisors to know how you can achieve both these goals.

TagsEducation Planningretirement planningSavings
Previous Article

Helping Aging Parents with their Money

Next Article

Importance of Focus for A Successful Financial ...

0
Shares
  • 0
  • +
  • 0
  • 0
  • 0
  • 0
WiserAdvisor Insights

WiserAdvisor Insights

A team of dedicated writers, editors and finance specialists sharing their insights, expertise and industry knowledge to help individuals live their best financial life and reach their personal financial goals. We believe that there is no place for fear in anyone's financial future and that each individual should have easy access to credible financial advice.

Related articles More from author

  • Early Retirement planning
    Retirement Planning

    Should I Stop Contributing to Retirement Accounts if I Plan To Retire Early?

    March 6, 2020
    By WiserAdvisor Insights
  • Retirement-fund
    Retirement Planning

    All About Withdrawing Retirement Funds

    January 7, 2020
    By WiserAdvisor Insights
  • Retirement-Security
    Retirement Planning

    How to Avoid a False Sense of Security in Retirement

    September 17, 2019
    By WiserAdvisor Insights
  • Benficiary
    Financial Advisor Guide

    Things You Need to Know About IRA Beneficiary Designation

    September 1, 2019
    By WiserAdvisor Insights
  • Education-Planning
    Education Planning

    Why Your Education Planning Needs to Be around Your Child’s Ambitions

    September 2, 2021
    By WiserAdvisor Insights
  • Deferred Annuities
    Financial Planning

    All you Need to Know Regarding Deferred Annuities

    December 22, 2020
    By WiserAdvisor Insights

You might be interested

  • 6 Important Financial Instruments to Make Your Financial Plan a Success
    Financial Planning

    6 Important Financial Instruments to Make Your Financial Plan a Success

  • High Net Worth Wealth Management
    Investment Management

    7 Wealth Strategies For High-Net-Worth Individuals In 2023

  • 2023 Income Tax Brackets
    Financial Planning

    New 2023 Tax Brackets and Deductions

Don't miss out! Get our Helpful Financial Tips Newsletter

  • Popular Posts

  • The benefits of working with a financial advisor - WA

    The benefits of working with a Financial Advisor

    By WiserAdvisor Insights
    July 16, 2019
  • Financial-Professional

    How to prepare for a meeting with your Financial Advisor

    By WiserAdvisor Insights
    July 8, 2019
  • Do's & Don't investment portfolio

    The Dos and Don’ts to Protect your Investment Portfolio in a Bear Market Amid The ...

    By WiserAdvisor Insights
    April 22, 2020
  • retirement-accounts

    Choosing the Best Retirement Accounts

    By WiserAdvisor Insights
    July 8, 2019
  • Retirement-Planning

    Retirement Planning checklist

    By WiserAdvisor Insights
    July 8, 2019
  • Why investing for goals is the right way of investing

    Why Investing for goals is the right way of Investing?

    By WiserAdvisor Insights
    July 16, 2019
  • Portfolio diversification

    5 Dangers of Over-Diversifying your Portfolio

    By WiserAdvisor Insights
    July 26, 2019
  • Financial Planning for couple

    The Complete Guide on Financial Planning for Couples

    By WiserAdvisor Insights
    August 1, 2019

Categories

  • Business Finance (2)
  • Education Planning (29)
  • Estate Planning (20)
  • Financial Advisor (1)
  • Financial Advisor Guide (30)
  • Financial Planning (121)
  • Investment Management (65)
  • Personal Finance (10)
  • Portfolio Management (1)
  • Retirement (16)
  • Retirement Healthcare (1)
  • Retirement Planning (79)
  • Retirement Plans (1)
  • Uncategorized (2)

The blog articles on this website are provided for general educational and informational purposes only, and no content included is intended to be used as financial or legal advice.
A professional financial advisor should be consulted prior to making any investment decisions. Each person's financial situation is unique, and your advisor would be able to provide you with the financial information and advice related to your financial situation.

WiserAdvisor is America’s oldest and largest independent network of screened financial advisors. We make it easy and convenient for consumers to find and connect with advisors in their area. We have successfully helped over 100,000+ individuals find their best financial advisor since 1998 with no match fees, no commitments, no obligation, and complete confidentiality. WiserAdvisor has been featured in The Washington Post, The Washington Journal, ABC, CBS, Yahoo and has been seen in numerous other leading financial news and information websites.

Follow Us

  • Recent

  • Popular

  • High Net Worth Wealth Management

    7 Wealth Strategies For High-Net-Worth Individuals In 2023

    By WiserAdvisor Insights
    January 27, 2023
  • Financial New Year's Resolutions

    6 Financial New Year’s Resolutions for 2023

    By WiserAdvisor Insights
    January 11, 2023
  • Future Investment Trends 2023

    Key Trends and Concerns for Investors in 2023

    By WiserAdvisor Insights
    January 9, 2023
  • The benefits of working with a financial advisor - WA

    The benefits of working with a Financial Advisor

    By WiserAdvisor Insights
    July 16, 2019
  • Financial-Professional

    How to prepare for a meeting with your Financial Advisor

    By WiserAdvisor Insights
    July 8, 2019
  • Do's & Don't investment portfolio

    The Dos and Don’ts to Protect your Investment Portfolio in a Bear Market Amid The ...

    By WiserAdvisor Insights
    April 22, 2020

Contact Us

Corporate Headquarters

12150 Monument Drive, Suite 700
Fairfax, VA, 22033

Business Hours

8:30 AM – 5:00 PM EST (Monday – Friday)

Email Address

wa.assistance@wiseradvisor.com

Phone Number

(703) 651-2060

Fax Number

(703) 259-4487

  • Privacy Policy
  • Terms & Conditions
© Copyright 2022 WiserAdvisor.com. All Rights Reserved.