Savings for retirement and college
I am currently working as a consultant so no longer contribute to a 401(k) however I planned on adding money to my current IRA. I’m wondering if I should hold off, leave money in my bank account until the market bounces back to add money to the IRA? Or is there another option for me to save money for long-term use?
Also, I have two sons 12 and 14 stones throw from college. For various reasons we have not been in a position to set money aside for them for college but would like to. At this point, given the status of the market, what do you suggest is the best option To set money aside for them for college?
It would also be nice to have something where family members can contribute to their funds. I have savings accounts set up for them but they’re relatively small. I also planned on setting up I9 bonds for them. Any other suggestions?
Terry Says
Whew — you’re facing a lot of financial issues down the road! You need a reality check.
Let’s start with your children. Have you taken a look at what even community college (living at home) costs?
I hope they are sports stars and in line for athletic scholarships. Right now is the time to start warning them that there is little chance they can go away to college for 4 years. Even with financial aid and student loans, with no savings you will not be able to swing it. Don’t believe me — check with your high school guidance counselor about what you can and should be doing now.
Also go to www.Finaid.org — the website that shows you everything you need to know about paying for college and about financial aid. This aid will not just materialize; you have to plan starting now.
As for the accounts you opened for them — if custodial accounts they will weigh very heavily against your family in the aid formula. I suggest closing them out and opening a 529 College Savings Account for each of them. Family andfriends can make contributions to that account. Read this column
If you live in Illinois, contribute at www.BrightStart.com. YOu’ll get a small tax deduction on statetaxes for your contribution.
As for your own retirement, that is going to be tough. I’d still recommend making a small contribution to your IRA every year. And better to buy when the market is low!
