As I watched my 4 year old daughter play her favorite game over the snowy holiday, I began to consider what her future holds. I can’t help but chuckle at some of the sayings she comes up with. Some of her other favorite games include tea party and art, though I must admit, it gets a little old when she plays “teacher” and is in charge of the crayons. After all, one can only find so many uses for a single color.
While I can’t be sure what she’ll choose as a career, a dentist, teacher, pre-school director, or stay-at-home-mom, my wife and I have started saving for her future through the North Carolina 529 college savings program and that is what brings me to this writing. College is hopefully in her future, but if not we have the option of changing who the beneficiary is on the account. We are comforted in the knowledge that if she chooses not to further her education, the funds can be used to pay for another member of the family (including a cousin). Also, saving with the benefit of a tax deduction is a nice feature. When considering what savings program to choose, an investor basically has three philosophical options:
- Do nothing and hope for scholarships
- Save for part of the expense
- Save for, or pay for, all of the expense
We chose to save for part of the expense. We got a bit of a late start on having a family so our daughter will be entering college right about the same time that we are going to be slowing down for retirement. We are faced with an interesting dilemma: We can sacrifice our future savings goals so that she can graduate college with little to no debt, or we can allow her to grow and accept responsibility for her own education through loans and work study programs. Our philosophy for her education is best described as follows: we will save what we think we can afford and if we are in a position to help by paying down or paying off student loans when she graduates, then we will. But one thing is for sure: there are no loans for retirement.
Neal Nolan, CFP(R)