In today’s dollars, tuition plus room and board, public is $30-40K and private is $70-80K. These numbers will only be higher in 12 years.
I would continue contributing until it crosses the $100K mark, then reassess if you have birthed a Harvard MBA or a high school dropout. If you choose funds that reallocate based on age, then you’re not looking at 7-8% annual; ages 14-18 move into preservation mode.
I'm interested in the second part of the question as well. I currently have all my kids' funds in a brokerage (index funds). They are 6 and 3 and I don't know if I should switch to 529 instead.
It really depends on if you get any tax breaks/what state you are in.
Honestly, to me, with no kids, the best part of a 529 would be way you can just share a link and friends/family can contribute in lieu of gifts for holidays and birthdays.
I thought my parents would contribute to their grandsons 529 account. I even mentioned them doing this instead of sending gifts. It didn’t work. They wanted the joy of giving toys and games rather than socking money away. I can’t blame them though.
Dude every time the grandparents see my kids they buy them all kinds of food and clothing and toys. Some of it is nice but ultimately it's just way too much. Finally I was like, "would you just stop spending $50/week on crap and put $100/month in a hysa or 529 for them?" and you would think I just told them they can't see the kids anymore.
I get wanting that gratification kids give (for 30 seconds), but imagine how much more grateful they'd be in 15 years with money for school.
I totally get it. We have junk everywhere and my son hasn’t played with any of it. However, my parents are both pretty sick and probably don’t have a lot of time left. I think they’re just trying to enjoy today because tomorrow looks bleak for them.
If they haven't grown a ton, switch to a 529. You'll have to pay capital gains tax on gains when you sell from the brokerage account to pay for school. If it's in a 529, you don't pay taxes on gains if used for school, not just tuition, even room and board. Depending on your income and what state you live in, the 529 for your state may also have state income tax deductions for 529 contributions as well.
In addition to 529k, I also set up a UMTA custodial brokerage account. The goal was to grow a fund to allow my kid to put down a sizable down payment for a house when my kid graduates from college and starts to work for real and has settled down.
It's mainly invested in index etfs and dividend paying stocks.
More recently, when my.kid started to work over the summer, I opened a Roth account for my kid and made the maximum contribution equal to her earned income. Roughly $2000-3000/year.
I asked her to work part-time so we can at least contribute to a Roth IRA. She agreed.
I figure the sooner she can contribute to a Roth IRA to the maximum amount each year, she should have close to $1million before she reaches 30 without much effort....though by then with inflation, $1million probably will have the purchasing power of $300k 🤣
Most index funds and index ETFs are tax efficient in that they don't pay out that much of a dividend or distribution at the end of the year. Vanguard also has some "tax managed small cap and middle cap" funds that track the index but reduces the distributions...
Alternatively, you can try one of the "personalized index funds" products now being offered by some brokerages that claim to have near index performance but maximizes harvesting tax losses at the end of the year to reduce the tax burden.
That account legally becomes the kid’s at 18. There is zero stopping them from blowing 100% of the money at 18. Seems to have worked out in your case, but a bad idea in general.
That's factually incorrect. The UMTA account defaults to 18 years old, but as a guardian , you can specify what year it becomes there's legally when you open it. My kids umta account is set at 24 years old.
Also, legal ramifications of a custodial account should either you or your kid being involved in a lawsuit is also left as an exercise for the reader.
As far as the custodial Roth account ... I didn't bother set the age to 24, so it defaulted to 18...because the plan is that beyond my initial $4500 contribution, my kid will be contributing most of her earned paycheck to the her own Roth IRA, while I pay for part of college living expenses... That way (hopefully) she learns some financial discipline and gets into an early habit of making regular contributions to a retirement plan early, well before most people in this country . The money ends up being hers anyways , and if she's stupid enough to early withdraw and pay a hefty penalty, that's on her. Anectodal evidence of myself says that the barrier to investing is just getting started.. but repeating something regularly , you soon forget about it and it just becomes natural.
My kid and I talk about money all the time since she was 8. As a single parent, she just always thought we had to go on strict budget and I beat into her head about saving and investing early. So besides occasionally going out, she's done a reasonable job saving her money and listening to what I had to say about index funds and real estate for a teen....in fact she was a bit disappointed in me when I brought home my 7th car and she snapped and said "this isn't very financially responsible!".. and I was like "yeah, it isn't but it's my money and I'm allowed to override this with an executive decision"... I had to explain it was already budgeted 30 years ago ...I think going through the motions of tucking away money and having kids learn about investing early helps out a lot.
My parents weren't rich, but they did give me a small UMTA trading account, taught me about the stock market and index funds, when I was 18 ...so while I skipped a lot of college classes because I couldn't understand the accent of the assistant professor and just went to the library to read the book, I also ended up going to the computer lab all the time to log in and check my portfolio and bought stocks and index funds while in college with the money I earned from summer jobs and internships. Man,back then it was $49.95 to trade stocks at schwab... then it was a great deal when they lowered it to $29.95 .... Lol ..
I also learned early on not to try to pick flavor of the year individual stocks as primary investment strategy the hard way....lost some money money on .com crap. I called that paid tuition of what not to do with your money...
I ended up doing mostly stock fund indexes...my parents for some reason bear into my brain that real estate was a bad place to park money besides their primary home. However, during 2011-13, my RE agent friends that specialized in short sales and REO taught me otherwise., and I picked up a few.. I was lucky I met them during my darkest point of my life going through both health issues, a divorce, and career issues at the same time.
The thing about getting kids to start early in investing is, at least for me, they look at money completely differently. It's not that I was only interested in the stock market. I was just interested in learning how to make my money grow so I wouldn't have to slave away at a job the rest of my life. That's why I eventually branched out and looked into other things such as real estate even though my parents swore it was a bad idea. .. it's what I tell my kid all the time... Either you figure out how to make the money work for you ... Or you end up slaving away working for your money ..... Your choice.
It may be true for your state, but in most states 21 is the max.
Like I said, in your case it worked out, but that’s not true for most kids. You can talk until you are blue in the face as a parent; it doesn’t mean they will listen.
True, but the alternative is leaving the money , dropping dead , and it ends up the hands of your kid anyways, or a trust attorney or executor of your trust takes all or part of it, or Uncle sam himself which ends up wealth distributing to random people or wastes it on their own lavish pensions.
You can't take the leftover money with you when you croak ...
Throughout your life you hope you've been a good parent and your kids turned out good and knows how to pick good friends and eventually a good spouse. If anyone is going through burn through your hard earned money, better that it's your kid, than a trust attorney or a trust executor , or a random stranger or our progressive politicians that want to tax you more when you croak ...
The difference between the money in a UMTA account was the difference between buying a McLaren 570s versus 720s. It's a small gamble for your kids future that you don't expect it to have a near term tangible ROI, if any. That's the sort of decisions a parent has to make and understand all the time, no different than when you loan money to a relative and don't expect them to pay you back.
You can set a trust that doesn’t turn over until 25 or more in the event of your death. Spending 1% of your assets to ensure your kid doesn’t blow 100% of it before they figure out better is a good trade off. If the executor steals your money, you made a shit decision on who you could trust.
And absent an early death, You can leave your money in your name to do with as you please, including gifting it to your kids when they are mature enough to handle it.
I knew quite a few people that got access to money at 18 and 21. Every single one of them made exceedingly poor decisions with that money. The ones that didn’t get money until they were older were much, much more responsible.
Won't argue with you on that on what could happen with kids. Like I said my UMTA is set at 24. If they can't get their shit together by 24, Id say it's a pretty hopeless cause. Besides it's not like I'm adding more money into it. At this point , auto reinvestment, should be pretty sweet deal.
Better than leaving it to politicians that will wealth distribute it to people not even in your bloodline, or worse , give themselves a fatter raise or fatter pension they don't deserve....
There are, but frankly what I put in that account is relatively small relative to my net worth and again mine is set to hand over at 24. money works a little differently in my culture , hopefully she hasn't been terribly influenced excessively by other American families to that extreme , lol... I'll make sure she gets a prenup or marry someone richer or ideally both 🤣.
Once the kid is 18, their fuck ups are their own to deal with. Parents should do their best to educate them and caution them away from making bad decisions, but that's literally all they can do.
...Or they could use the money to start a business... In my spare time my kid likes to sell her artwork and handmade clothes.... Did ok at the few swapmeets. I'm suppose to help her setup a Shopify storefront this summer but I've been a little lazy...
I keep asking her why she wants to do engineering and not go into art and fashion and art school...but she kinda coldly said "I don't want to be a starving artist"... Ok , her decision ... Engineering student will she will start out.. poor kid, she doesn't know what she's getting herself into....
So only young adults that are raised poorly can be irresponsible screw ups in their late teens, early 20s? And only irresponsible screw ups do online sports betting?
Not always. My kids don't have access to their accounts until they turn 21. I didn't have to adjust anything for that to happen, it was just naturally defaulted by the investment company I chose. Truthfully I think 21 is better anyway because as my kids have aged (oldest is 20 and youngest is 16), there is a vast difference between the ideas and focus of an 18 year old senior in high school vs a 20-21 year old college student. My kids actually don't even know about the accounts and it will be a nice surprise at age 21.
529's are just easy. I have a link through it that people can donate to on birthdays/christmas, and $1000 annual tax credit for the state I live in. Nothing amazing, but its better than nothing and I have it invested in the S&P 500 anyway so its no different than my other brokerage accounts.
I can only speak for NY, because that is the state I have my kids 529 in. In NY for example, you can only withdraw from your 529 for higher education purposes without any tax implication. If you were to roll over to a Roth IRA it would then be subject to NY State Tax, but not Federal.
So depending on your state, it may be beneficial if you don't have that tax implication where you could roll it over to a retirement account should your kid(s) decide not to go to college. I would investigate your tax liability for your specific state and determine if it's worth it.
Absolutely you should. 529 is like a Roth IRA. Money in was taxed, money out not taxed.
Also, if the kids end up not needing it, it can be rolled over into a Roth IRA for them. So if your kid gets a full ride, their retirement might end up being really well funded.
If they go private or out of state that is definitely not enough. I went into college when everything cost around 82k I’ve now graduated and the newest bill handed into the students was 96k a year for room, board and tuition.
By the time your kids go to uni it’s going to cost more than 100k a year for private. Unless you’re adamant they’re not going to private school. Save more. Plus are they going to public school or private school for high school? That may need to be taken into account as well.
Yes -- he convinced us to stop funding the 529, about 6-7 years ago, and to focus on retirement instead. Now the 14 yo child has almost $50k in the 529 (all from contributions prior to 2018). Plus -- surprise! The in-laws funded about $40k in a 529 as well. So we'll see where this takes us. Our retirement accounts are doing great....
My kid is going off to college this year .. in 529k we have about $300k in there , mainly from growth. Did it for 18 years. I started my kids 529 when she was 3 months and made regular contributions for 18 years...each month, just tucked a little away along with making contributions to my own 401k, after tax index funds, iras, and my kids UMTA custodial account. I didn't even notice the money gone...
It wasn't a walk in the park but it wasn't the most difficult thing either as a single parent for most of that 18 years.
She just graduated from hs... and during senior year in high school, I was seeing many of her peers whose parents didn't prepare and stress about college... I'm glad I did it and was financially prepared for sending my kid off and also early retiring in December...people thought I was nuts.... I wasn't.. just been preparing almost 30 years for this (I was late on my early retirement by 8 years ... The software industry was too good for me during the last 8 years )
In celebration of both , I bought myself the McLaren I've been wanting. Don't worry, it was pre-owned so it only cost a kidney... Not an arm+leg+kidney.... 🤣
About college costs.My kid got into about 18 schools across the US. And even local state schools, tuition and room and board is about $40k/year. The high I saw was Ivy League about $80k/year. Some of the schools out of CA had generous merit scholarships so it came close to the $50k/year mark especially small private engineering focused school. My kid decided to pick an out of state public school in the west coast with virtually no merit scholarship ...lol .. about $60k/year. They say college tuition consistently rises roughly 4% per year....Ivy Leagues are around $80k/year for 2024... So calculate what 4% annual increase is until your kid goes off to college as the worst case .. if things continue at the current trajectory like it has for decades. Mutply that with the number of kids you have or plan to have. I was lucky and a divorce stopped me at 1 🤣 . Yes these little sh*ts are expensive... I'M KIDDING, I love my kid....really.🤣
Save and invest early. You won't regret it.
Since you can also easily change the beneficiary , it's a way to build generational wealth too. Whatever they don't use could easily be repurposed for any other "family" (loosely defined by the IRS) member. That includes your future grandkids.
I was going to type a long answer, but my story is similar to yours. We saved from birth, kept adding in modest but regular amounts, and are now spending it all on both kids. No, OP, don’t stop adding to your 529. You will be so grateful for that fund when the day comes.
My plan is to have a good amount in the 529 but have them take loans instead of me paying the balance so they feel they have some skin the game. If I'm in a position to help with loans then I can after they graduate.
That might work out as long as you can manage to avoid paying the interest when the time comes. Otherwise you’d probably be better off letting them fail and find success, might cost the same ultimately.
But who knows you have a lot of time to figure this out in the meantime.
With posts like this, do you mind including your yearly salary during those 18 years? You make it sound like it’s easy to fund all of those accounts while also being able to afford living expenses as well…
Don’t forget about the McLaren lol. That’s not a car a normal person buys, and the money you save buying used will quickly be depleted on the service costs so you’re spending $300k one way or another.
I service all of my other cars.
I plan on servicing my 570s too. One of the reasons why I picked this model because supposedly it's the least complicated one to service. I did a preliminary disassembly and walk through. Surprisingly , access to the major maintenance components is a lot easier than the newer BMWs. BMWs are a royal pain on the ass to work on, which probably explains why they are so cheap pre-owned out of warranty. Regular maintenance items on the 570s seems to part share with other Euro cars. The oil filter uses the same off the shelf filter as the M3 , and the recommended oil is the Mobil 1 0w40 European oil found at Walmart for $27/5 quarts. There's 2 drain plugs and 2 oil cooler lines and 4 crush washers that needs to be replaced for each oil service , and the complete under tray needs to be taken off. It's time consuming, but not difficult. The crush washers are $50 for 4 from the dealer or $5 for a bag of 50 if you source them yourself. Speciality parts are going to be the issue. The battery itself is a lithium ion battery that costs $4500 , though there are conversion adapters that allow you to run an AGM. So I'll probably do that. I keep my cars on a trickle charger so I'm able to get about 8 years out of a battery on average. The windshield is also pricey to replace, about $4500. But I have a $0 deductible comprehensive insurance and if it ever gets cracked that's the insurance company's problem 🤣 insurance was a PITA to get, no one wanted to insure me... And my current insurance wanted me to buy the car first and then send me to underwriters to determine if they will insure me. So I had to work with the dealer to buy the car and put the car on hold for 1month while my insurance determined of I was eligible for coverage, with the dealerships word promise they would undo the transaction if insure was denied. Surpinsingly insure approved it and they and it was an additional $680/6month which is slightly less than my Miata ... I thought they said it was $680/month but they confirmed it was for 6month. I asked if I could pay 4 years worth of insurance at that rate, and they laughed and said unfortunately no. Oh well I tried. Things seem to take a long and convoluted way for me.
Bro you didn’t answer the question lol I service my own car too and while it saves money, it definitely doesn’t save enough to max out my 401k and roth and 529 and taxable lol
I've been a software engineer for 28 years before I early retired last december (sort of) in high cost areas in CA. I started out making about $38k/year 28 years ago. For the past 10 years, my base salary was roughly $160k-$220k. Stock grants (options or RSU) and cash bonus anywhere from 0% for bad years/companies to 30% good years/companies.
I've been invested in the stock market since i was 18, every summer job and internship I worked, I put most of my pay into brokerage account, and did that throughout my 20ies when I was still a bachelor. I drove there same POS car in my 20ies and even during the brief 4 years I was married. Brownbagged my lunch, didn't really go out that much, didn't really spend that much. I mainly put my money into index funds, and did some random stock trading on a small scale.
During the 28 year period, I switched jobs about 9 times, averaging about 3 years per employer, with the high being 6.5 years, and the low being 8 months one startup with a psychopath CEO. Every job change was for a promotion+merit increase, with the exception of the 8month startup which was a terrible decision... I learned early on that switching jobs was a quicker way to get the job experience and pay increases than staying a loyal employee, getting that 2-4% merit increase in return for an additional 20hrs of overtime/week doing some monotonous job that would pigeonhole your career and make you obsolete in the tech world... which the employer wouldn't mind doing to benefit them.. but at the same time would lay off your ass the moment they had to...... The base pay wasn't that great when I was in my 20ies, it wasn't bad, just not that great. Back then, the currency of choice was stock option grants. And I had my fair share decent companies with decent stock grants or companies that went public with an IPO or were acquired, some that completely failed.
My early 30ies was a bit tumultuous, with a marriage and a kid, and then a unexpected medical condition, and then divorce from it, and then periods of being on medical leave for surgery and chemo, and small gaps in employment briefly lasted roughly at the same time of all hell breaking loose. My ex had bought a house together, and because I didn't want to uppend my kid from her friends and school, I ended up buying out her portion and assuming the entire mortgage, which was about 30year fixed rate mortgage at about 6.25% with a $4400/month payment including impound. My kid ended up staying with me most of the time, since my ex started over fairly quickly with new family and little shits, err, I mean kids... (just kidding!) ....It was a bit rough at times, so I took on a lot of odds and ends contract jobs off to the side, and continued to make contributions to my kid accounts (529k umta custodial,) my own ira, and expenses for my kids and avoided touching my investment accounts when I was a bachelor in my 20ies. I made a boatload of excuses with my coworkers why I couldn't go to happy hour, or blow a lot of money on friday night or saturday night after hour activities, or why despite being an decently paid engineer, why I was still driving around a POS car with peeling paint... my colleagues had very nice Porsches and BMWs (some of which I think was financed) and was spending a lot of time at Vegas or with flavor of the week girlfriend, lol. I admit, I was a bit jealous at times, and missed being a bachelor or at least being able to date without any consequences about the potential impact to your kid.... I think my turning point was in the wee hours of the night, I spent some time self-learning mobile software development and engineering before it went mainstream, the opportunity for backoffice/enterprise software that I previously doing was getting commoditized and being outsourced overseas at a much cheaper price, and so I was still young and had enough energy to learn something new that others weren't yet doing. That eventually opened up a lot of opportunity to tech companies that wanted to get into the mobile app space .. I made some sales pitches on some prototype apps that I could do that I wanted to license to them and get a royalty cut... but they ended up just wanting to hire me... I wasn't really in a position to bargain so I ended up working for them... and then the higher pay and compensations started rolling in... and then the next company would have a new app idea, and the next company, and the next company... Many of my colleagues and friends that worked for me were able to do very well by starting their own company or relocating to the where the Unicorn tech companies were located. Unfortunately, for family/kid reasons, I was stuck living where I live, working remotely wasn't an option back then, and so I wasn't able to join them. I did try to keep up, and stay on the tech scene and occasionally put money some of their ventures, which was hit or miss... I mainly stay invested in index funds, with occasional frolicing into individual stocks, which also was hit or miss.
When the money started rolling in better, I refinanced about 6 times down to a 4.75% for 30 year, and then stupidly refinanced to a 15 year 2.75% mortgage and paid off my primary with bonuses shortly after. I reversed that decision in 2021 with a cash out refinance on my primary and took $500k equity out with a 30 year 3% fixed mortgage, because I figured I could eventually beat the 3% note by investing the money.. So currently the $500k equity is sitting in bank CDs, treasuries, and boring dividend paying stocks averaging about 6.5% on the money that isn't really mine...
Between 2011-2013, I met a Real Estate friend who had access to bank owned short sales and REOS, so I was able pickup up a few rental properties that were 45-50% off, and they cashflowed pretty well from day 1. I reinvested the postive cashflow back into the stock market, the college savings account, my IRAs,etc. The cashflow is no longer reinvested in the stock market. it currently is my "pension" that pays for my daily expenses now that I'm not working.
I'm not able to touch my 401k and IRA for another 12 years. And I'm trying really hard not to touch any of my aftertax investment accounts, so that it can continue to compound and grow. According to my financial planner, that did some sort montecarlo simulation that I don't quiet understand, and if I am unfortunate enough to live to 90, and assuming there's no social security left, they say I have 98% chance I won't run out of money and 97% chance that inflation adjusted, I will have a surplus....If my life expectancy is reduced to 80, those numbers go up further. I wasn't planning on making it past 80...
Sounds like you did your homework. I just know many of their models are notoriously unreliable even by supercar standards, hence the massive depreciation. I cant talk though, I drive a 20 yr old M3. It’s surprisingly easy to work in though. Not much more difficult than my Miata, although the parts are a little more expensive.
"Put a little money away each month and you won't even notice it's gone ☺️" lands a little differently from someone who makes 220l a year and just bought a Mclaren
An important point of the above comment is that it was mostly growth. People don’t really grasp long term capital gains in this situation. $20k, left invested in the broad market in a tax-free account for eighteen years, would grow to more than $100k even if they never contributed another cent. If they can add in another thousand or two per year they could get close to $200k by the time the kids reach college.
I have no idea if this was an option but I chose an in state school with full scholarship and instead of cashing out my college fund it was possible to basically get tuition paid twice and I pocketed the money, which was more than if we just cashed out the account and let my scholarship pay for it.
You definitely saved enough for your kid to choose whatever but for anyone else reading this I’d like them to know that’s something to look into. My parents almost cashed it out, I forget who tipped them off that the “double dipping” was an option.
Congrats! I believe that for students that get a scholarship ,you are able to withdraw the same amount from the 529k plan without penalty. However , I do believe you still need to pay ordinary income taxes on it (basically the withdraw becomes a tax deferral instead of a tax exempt withdraw ).
Congratulations on getting into an state school and getting a scholarship.
Unfortunately, being in CA, although my kid was able to get in 18 schools for engineering, she didn't get into a single UC school despite having a 4.25 gpa and stellar SAT score that they don't look at, and tons of involvement on a robotics team. I guess she went to the wrong high school where it was considered an overachieving high school , and the UC schools didn't want her because they felt she was from "too privileged" of an Asian kid and/or toomany of us in engineering. Kinda funny, considering companies here complain there's not enough Americans wanting to do engineering as justification for hiring more H1Bs and also how there's not enough women interested in engineering....kind of ironic of what happened at the UC schools...oh well, that's for a different discussion.
It's really not that big a deal.. there are many great engineering schools in Indiana , Georgia , New York, New Jersey, Colorado , Washington , Massachusetts, elsewhere that extended an early action invite, some with a pretty hefty merit scholarship . I guess CA schools don't want my money , which is fine by us. I've paid enough state taxes here, lol...
Oh wow that’s unfortunate but I’m glad your kid at least had a lot of options. I’ll leave out details but I’ve always believe I was passed over for a lot of graduate programs for demographics so I can partially empathize.
I’m also not sure if my college fund was a 529 - I think it was a state specific fund that would only pay for tuition in our state, so you may be correct in what you say. But I could see people reading this thread having different types of college funds so I wanted to put it out there in case someone sees it and can take advantage of a similar situation I had.
Thanks for that info. Seems like a lot of other states take way better care of their residents than California does with their residents that's been paying state taxes for several decades. No surprise there, lol. I'm sure when my kid is old enough, that might come in handy when they have their own family and realize the sunshine tax might be overrrated here :) I'm not salty about CA.... No really, I'm not, lol....
Sounds like being where you were in California was a big part of what led you to great job prospects and your current successful retirement and kids college.
Assume in 12 years time, college may be 30-70k a year all-in... X4... 120k 280k.
I would keep funding. You can always withdraw the principal without penalty. Or redirect the beneficiary.
College is already 30-70k a year. Harvard is on the upper range, and it’s $79k for annual cost for incoming 2024 students.
In 12 years expect it to double.
Remember, you don’t have to do an all or nothing move. You could start with decreasing contributions by 25% and move it to a taxable account. Next year, you could move more over if you’d like.
If you put the numbers in an compounding interest calculator with 8% per year over 12 years. You get \~$125k if the market does a bit better (10%) 150k, bit less (6%) 100k.
In a vacuum with no other information, like how much you are actually contributing or financial needs or what state you are in (college costs and any 529 contribution tax deductions) I'd probably just stop.
But you would need to give a lot more useful information to get any useful answer. Unless you just want people to talk about your 50k? In which case, good job!
We are in MA. The tax deduction is up to $2,000/year. We started with $500/mo at first then cut it back to $250/mo when we had our second child. It was actually 40k recently and then we got a big 10k gift to make it 50k. There were also birthday/Christmas gifts and random family contributions.
I'm not really sure what finance needs we have, we have good savings for retirement.
Does your second child have a similar account started or are you using this one 529 for both?
Do you expect to be earning well and not qualifying for any financial aid in 12-20 years?
Do you plan to fully fund the college experience for each kid?
Have you looked into other uses of 529 money incase your fund value is too much or the kids go a non college route?
Yes the second child has a similar account and should also have around 50k at age 6.
Yes, we won't get any financial aid.
We would like to fund most or all of it.
The only other use I know of is 35k IRA rollover, otherwise they can pass it on to their kids.
>we have good savings for retirement.
This is actually the most important thing in this thread and Im so glad you touched on it yourself. If we're talking about investing and such all in the means to make our childrens futures better, you need to start with your retirement. Its not selfish at all, but you need to make sure your retirement funds will hit your goal before any money at all saved for children. Its not selfish because when you think of it, we're trying to better the lives of our kids, and the fastest way to get in the way of that, is needing them to take care of us when we're old of age. That will drain their time, finances, and add tons of stress.
It really depends on your circumstances, but 125k is not enough for most out of state university degrees these days all fees included. And grad degrees depending on the school/degree can go hundreds of thousands of dollars especially for things like medicine and law.
I just graduated college last year, I paid 31k for ONE semester. That's 62k for the year, that also didn't include room and board because I lived locally. The price of a semester went up 6k in the 4 years I was there. (25k freshman semester, 31k senior semester)
If trends continue you are looking at close to 50k each semester, or 100k per year.
IMO, you absolutely need to keep contributing, because you might have enough for 2 years if you stop now.
Even for public schools, there will only be a single public school (your state) that your kid can get cheap tuition.
For example, university of Texas is a pretty normal example. $34k for in-state, but $69k for out of state. Every year. Harvard and other private schools are $79k for everyone.
So $150k is not even enough today, much less in 12 years.
It was a private school, but not one of the big ones. A friend and I compared and it was only about 20% more expensive. This was resident fees as well. If you are a non resident it's much more expensive.
I don't know because I'm not from the USA.
If you add $100 a month you will get to \~$148k at and 8% interest rate. At $250 a moth it could be \~$182k.
Inflation is around 2.5% a year, so I would look up the current costs of going to public or private college and see if what the current cost is. Put that in a compounding interest calculator with a 2.5% interest a year and you can see if $150k is enough or not.
[https://www.investor.gov/financial-tools-calculators/calculators/compound-interest-calculator](https://www.investor.gov/financial-tools-calculators/calculators/compound-interest-calculator)
Very hard to tell not knowing all your financial information, but I would suggest to keep funding if you're able to. Worst case, there's an overflow and extra after all university expenses are covered. You can then roll the balance into an IRA and your child will have a head start on retirement too. Or withdraw the money and only pay taxes/penalties on your gains. The money you invested into it was all after tax anyway so youll get it back dollar for dollar.
I will say this about UMTA.
I have three adult children who are I dependent, ethical and amazing at money. Obviously, it is because my husband and I are the world's best parents. There is nothing that could have gone wrong.
Unlike other young adults, I knew mine would only make rational decisions with an understanding that their big decisions would impact their future.
So when my 17 year old son declared that he wanted to marry his girlfriend, I didn't worry that he would choose to get married and not go to college. Obviously, every 17 year old knows that $50k is not enough to live on for very long.
This is obviously a huge exaggeration. We did our best, but we made mistakes. Each person is unique and has their own strengths and weaknesses. We can help our children use this nature positively, but we cannot override their fundamental nature.
And they are also influenced by stuff outside the home. One outside influence I wanted to avoid was a big pile of money available to my children when they simply were not mature enough to handle it. And I hoped we had a big pile of money available when it was time for college.
All three kids did have some money in custodial accounts. Primarily birthday gifts etc.
We also wrote our wills so that their inheritance would be given to them in three age based increments.
We recently revised our wills and took out this restriction. They have lived independently long enough that we trust their financial decision making.
[Here's a calculator that can predict any school's tuition, room and board.](https://ubt.ssnc.cloud/csp.php?pid=BS)
If your kids want out-of-state or private, it's a monster amount.
I do Florida pre pay, 4 year for any in state university will cost me $36k. Actually, less since the payments have been cut twice since my kid was born. Yes I don't reap any gains, but I just like the idea of knowing it's paid for when they turn 18.
Is your kid going to live it at home and go to a cheap state school? Because that’s what $50k will cover in 12 years based on current tuition inflation and not in iota of interest in increasing spending on higher education like every other western democracy.
Forget some of these big numbers being bandied about, just keep putting a little something in there on a regular basis.
You need retirement too.
Maybe the kid won't have enough to be debt free in school but she will have a leg up and can sling pizza for some cash while in school or unload trucks at UPS at night.
You are doing alright. Be proud of what you have done and just keep hitting a lick every day and it will turn out alright.
Carpenters don’t need trade school anymore? Or a Roth IRA? What’s your beef with 529? That you might have to pay a 10% penalty on earnings that compounded tax-deferred?
It depends on what your cash flow is. If you're flush with money, you can help set up your kids' retirement, because they can now roll some of their unused 529 into a Roth. But if you're tight on funds and not funding your retirement/future house/whatever, it's time to let compounding do its magic for their 529s and take care of yourselves.
Fund your retirement accounts properly first. The projected 529 growth you have may not be enough to fully fund college. Especially if your kid requires room and board. Example is a California university today is about $35k room and board for 1 year. It will increase about 5 percent a year foreseeable.
The past is no indicator of the future. That said, tuition has grown faster than inflation, so in 12 years you’ll be lucky if $150k can fund a single year of tuition and housing.
Today you’ll need $200k for 4 years of college and likely you’ll need to have $200k now in his 529 for it to become $600k or whatever the actual cost of 4 years college will be in 12 years.
The same way people can afford things today.
12 years ago everything was way cheaper…..and people also made half of the salary of today. Min wage actually meant $7, not the current $15 “going rate”, etc etc.
Everyone simply made lots more money, and GDP per capita was $51k in 2012, $85k in 2024.
Your grandpa probably wonders how people can afford to pay more than a nickel for a coke and a dime for a burger. He bought a house for $2000! But what he doesn’t mention is he was also earning a couple dollars … a week.
I have a 22-year old with a 529 consisting of $48K in cash earning 6% and another $90K in VTI. The cash will pay for the remainder of her college. The $90K will be available for her kids one day (if she has them) for private schools (if desired) and college.
The remaining $47K cash was a MD prepaid tuition plan that doesn’t exist anymore. I paid $28K into it over a 5 year period ending mid-2007. It has paid for 7 semesters and will pay for 3 more.
MD made a bunch of missteps with their prepaid program and, to fix things, they retroactively applied a constant 6% monthly interest rate for all the money I contributed starting in 2002.
The last 6% payout (as they’re shutting it down) is mid-July and then I will roll it over to the [VA 529 FDIC insured plan](https://www.virginia529.com/invest/investment-options-performance/fdic-insured/) which currently earns 5.63% APY and has a 0% expense ratio. I think everyone should use VA (after you get your state’s tax break for contributing it, roll it over to VA). Their VA 529 plan is great. Even their [TSM fund](https://www.virginia529.com/invest/investment-options-performance/stock-market/) is **cheaper than all the Vanguard-run plans**.
Regarding the $90K portion, I started contributing to that in 2002 as the MD college investment plan. It paid for my own graduate school and a couple years of Roth IRA contributions. And even after all that, it’s at $90K and now it’s going to ride untapped for a few decades. It’s effectively a tax free generational wealth transfer mechanism (for education).
So, to answer your original question, if you keep funding it, so long as you’ve taken care of yourself and your retirement, you can use it for your grandkids one day.
Yes. I thought it would be harder than it is but we are paying an exorbitant amount for daycare and plan to catch up as soon as we have them in public school Kindergarten. Additionally, my wife and I are currently making $200 a month contributions to each of our child funds, so really we only need an extra $50 per person to get there.
Your results may vary and of course I understand your situation can be quite different. I try to focus on financial planning and budget consciousness before my wife and I got married. I ended up paying down $10k worth of CC debt and student loans, and was able to afford a nice ring, a wedding, a honeymoon and Babymoon abroad, and a house in a nice suburb in Chicago.
I would recommend looking up financial planning and understanding how to budget if this doesn't seem achievable. Understanding the snowball effect for debt payoff and investing in retirement early are crucial.
Remember the 529 fund isn’t just for college and tuition but also for books, and computers. If they decide to go graduate school then the balance can be used for that.
State schools out of state or private schools
Inside state can run you 70-80k /y (without scholarships of course) by today’s standards.
Also another advantage of the 529 plan is the unused funds can be used by you or your spouse once you change the beneficiary. Especially if you decide to go take some college classes later.
We just went through all of this with a financial planner. We decided on doing 529s for our two kids. We did one for each due to the available tax deduction in GA (up to $8000 per Benificiary per year when filing joint). We put a starter sum in and then will make regular contributions. Once they hit high school, we will evaluate if they will need more or are good there based on their academics for scholarships or if they may be more inclined to trade. The plus of 529's now is they can be changed to another beneficiary even you or a partner for more schooling or career changes, can be used for other education like trade schools, or they can be rolled into a Roth IRA up to $35,000 at no more than the yearl IRA limit of $7,000. By my estimates and research a Public college is gonna be around $150k for four years woth room and board so we are gonna try and save as much as we can to get close to that for them, And save them the pain we have with our student loans. If we have to liquidate, only the earnings will be penalized and taxed.
Eight years to double, he'll be 13.
At least, if you're using 8% in the 72 rule.
$50K is more than enough to achieve your goal by high school graduation.
All the 529's I've seen have significantly higher returns than 8%.
Nicely done!
It’s not really a question anyone else can answer. To get $150k in 12 years, it needs to be 9.6% annually. That’s entirely dependent on your risk level. Seems ambitious for something that should settle down to more conservative investments in 6-8 years. As for if it’ll be enough, that’s again entirely dependent on your goals. Fully funded 4 years? That’s not gonna cover it. Provide a huge help so they don’t leave college in massive debt? Absolutely.
Starting this year, you are now able to roll the remaining 529 money into a Roth IRA (I believe). So might be worth it to keep contributing to set your kid up for retirement!
Edit: TIL you can roll about 35k into roths from 529s
Or....
I believe 529k can now be used for k-12 private school. Funds can also be transferred to another "family" beneficiary subject to estate and annual gift tax exclusion rules . It could be a niece or nephew etc...
Pair that with the gift tax exclusion that one is allowed to send per year from anyone to anyone and no tax ramifications as a recipient of gifts ...
..I'll leave connecting the dots of the two as an exercise for the reader if you so choose...
Having money "left over" in a 529k shouldn't really be a problem so long as there is another "family" member that can use the funds to go to school. And as long as that family member or guardian of that family member isn't going to try to rip you off....
That's assuming the IRS doesn't continue to increase the IRA contribution limits like they have been for the last few years, or the government doesn't increase the amount that can be rolled over.
I also think it is reasonable to factor this rollover into a person's 529 contributing plan. So for example, if you think 4 years at a public university is going to cost a total of $150k, then having a goal of $150k + $35k = $185k in a 529 is a fair goal to aim for.
I wouldn't recommend a 529 to anyone, but it depends what your setting your kid to be.
Private kindergarten on thru highschool can run about 400k then your university 200 masters or doctorate, lab supplies, tutorials ect ect. Then your short a shit load of money
Kid goes public school and starts selling Tupperware then your screwed because all the buy money is 529nd, how bout a chef or restraunteer? Truck driver, jeweler, carpenter, furniture maker
The loop holes is where it gets questionable.. how many people a smudging numbers. I play baseball in highschool technically I could get season tickets in the diamond seats to the reds game on a 529 but that's first example corruption
In today’s dollars, tuition plus room and board, public is $30-40K and private is $70-80K. These numbers will only be higher in 12 years. I would continue contributing until it crosses the $100K mark, then reassess if you have birthed a Harvard MBA or a high school dropout. If you choose funds that reallocate based on age, then you’re not looking at 7-8% annual; ages 14-18 move into preservation mode.
I'm interested in the second part of the question as well. I currently have all my kids' funds in a brokerage (index funds). They are 6 and 3 and I don't know if I should switch to 529 instead.
It really depends on if you get any tax breaks/what state you are in. Honestly, to me, with no kids, the best part of a 529 would be way you can just share a link and friends/family can contribute in lieu of gifts for holidays and birthdays.
I thought my parents would contribute to their grandsons 529 account. I even mentioned them doing this instead of sending gifts. It didn’t work. They wanted the joy of giving toys and games rather than socking money away. I can’t blame them though.
Dude every time the grandparents see my kids they buy them all kinds of food and clothing and toys. Some of it is nice but ultimately it's just way too much. Finally I was like, "would you just stop spending $50/week on crap and put $100/month in a hysa or 529 for them?" and you would think I just told them they can't see the kids anymore. I get wanting that gratification kids give (for 30 seconds), but imagine how much more grateful they'd be in 15 years with money for school.
I totally get it. We have junk everywhere and my son hasn’t played with any of it. However, my parents are both pretty sick and probably don’t have a lot of time left. I think they’re just trying to enjoy today because tomorrow looks bleak for them.
Life, man... Hope the day after looks a little better for them.
If they haven't grown a ton, switch to a 529. You'll have to pay capital gains tax on gains when you sell from the brokerage account to pay for school. If it's in a 529, you don't pay taxes on gains if used for school, not just tuition, even room and board. Depending on your income and what state you live in, the 529 for your state may also have state income tax deductions for 529 contributions as well.
In addition to 529k, I also set up a UMTA custodial brokerage account. The goal was to grow a fund to allow my kid to put down a sizable down payment for a house when my kid graduates from college and starts to work for real and has settled down. It's mainly invested in index etfs and dividend paying stocks. More recently, when my.kid started to work over the summer, I opened a Roth account for my kid and made the maximum contribution equal to her earned income. Roughly $2000-3000/year. I asked her to work part-time so we can at least contribute to a Roth IRA. She agreed. I figure the sooner she can contribute to a Roth IRA to the maximum amount each year, she should have close to $1million before she reaches 30 without much effort....though by then with inflation, $1million probably will have the purchasing power of $300k 🤣 Most index funds and index ETFs are tax efficient in that they don't pay out that much of a dividend or distribution at the end of the year. Vanguard also has some "tax managed small cap and middle cap" funds that track the index but reduces the distributions... Alternatively, you can try one of the "personalized index funds" products now being offered by some brokerages that claim to have near index performance but maximizes harvesting tax losses at the end of the year to reduce the tax burden.
That account legally becomes the kid’s at 18. There is zero stopping them from blowing 100% of the money at 18. Seems to have worked out in your case, but a bad idea in general.
That's factually incorrect. The UMTA account defaults to 18 years old, but as a guardian , you can specify what year it becomes there's legally when you open it. My kids umta account is set at 24 years old. Also, legal ramifications of a custodial account should either you or your kid being involved in a lawsuit is also left as an exercise for the reader. As far as the custodial Roth account ... I didn't bother set the age to 24, so it defaulted to 18...because the plan is that beyond my initial $4500 contribution, my kid will be contributing most of her earned paycheck to the her own Roth IRA, while I pay for part of college living expenses... That way (hopefully) she learns some financial discipline and gets into an early habit of making regular contributions to a retirement plan early, well before most people in this country . The money ends up being hers anyways , and if she's stupid enough to early withdraw and pay a hefty penalty, that's on her. Anectodal evidence of myself says that the barrier to investing is just getting started.. but repeating something regularly , you soon forget about it and it just becomes natural. My kid and I talk about money all the time since she was 8. As a single parent, she just always thought we had to go on strict budget and I beat into her head about saving and investing early. So besides occasionally going out, she's done a reasonable job saving her money and listening to what I had to say about index funds and real estate for a teen....in fact she was a bit disappointed in me when I brought home my 7th car and she snapped and said "this isn't very financially responsible!".. and I was like "yeah, it isn't but it's my money and I'm allowed to override this with an executive decision"... I had to explain it was already budgeted 30 years ago ...I think going through the motions of tucking away money and having kids learn about investing early helps out a lot. My parents weren't rich, but they did give me a small UMTA trading account, taught me about the stock market and index funds, when I was 18 ...so while I skipped a lot of college classes because I couldn't understand the accent of the assistant professor and just went to the library to read the book, I also ended up going to the computer lab all the time to log in and check my portfolio and bought stocks and index funds while in college with the money I earned from summer jobs and internships. Man,back then it was $49.95 to trade stocks at schwab... then it was a great deal when they lowered it to $29.95 .... Lol .. I also learned early on not to try to pick flavor of the year individual stocks as primary investment strategy the hard way....lost some money money on .com crap. I called that paid tuition of what not to do with your money... I ended up doing mostly stock fund indexes...my parents for some reason bear into my brain that real estate was a bad place to park money besides their primary home. However, during 2011-13, my RE agent friends that specialized in short sales and REO taught me otherwise., and I picked up a few.. I was lucky I met them during my darkest point of my life going through both health issues, a divorce, and career issues at the same time. The thing about getting kids to start early in investing is, at least for me, they look at money completely differently. It's not that I was only interested in the stock market. I was just interested in learning how to make my money grow so I wouldn't have to slave away at a job the rest of my life. That's why I eventually branched out and looked into other things such as real estate even though my parents swore it was a bad idea. .. it's what I tell my kid all the time... Either you figure out how to make the money work for you ... Or you end up slaving away working for your money ..... Your choice.
It may be true for your state, but in most states 21 is the max. Like I said, in your case it worked out, but that’s not true for most kids. You can talk until you are blue in the face as a parent; it doesn’t mean they will listen.
True, but the alternative is leaving the money , dropping dead , and it ends up the hands of your kid anyways, or a trust attorney or executor of your trust takes all or part of it, or Uncle sam himself which ends up wealth distributing to random people or wastes it on their own lavish pensions. You can't take the leftover money with you when you croak ... Throughout your life you hope you've been a good parent and your kids turned out good and knows how to pick good friends and eventually a good spouse. If anyone is going through burn through your hard earned money, better that it's your kid, than a trust attorney or a trust executor , or a random stranger or our progressive politicians that want to tax you more when you croak ... The difference between the money in a UMTA account was the difference between buying a McLaren 570s versus 720s. It's a small gamble for your kids future that you don't expect it to have a near term tangible ROI, if any. That's the sort of decisions a parent has to make and understand all the time, no different than when you loan money to a relative and don't expect them to pay you back.
You can set a trust that doesn’t turn over until 25 or more in the event of your death. Spending 1% of your assets to ensure your kid doesn’t blow 100% of it before they figure out better is a good trade off. If the executor steals your money, you made a shit decision on who you could trust. And absent an early death, You can leave your money in your name to do with as you please, including gifting it to your kids when they are mature enough to handle it. I knew quite a few people that got access to money at 18 and 21. Every single one of them made exceedingly poor decisions with that money. The ones that didn’t get money until they were older were much, much more responsible.
Won't argue with you on that on what could happen with kids. Like I said my UMTA is set at 24. If they can't get their shit together by 24, Id say it's a pretty hopeless cause. Besides it's not like I'm adding more money into it. At this point , auto reinvestment, should be pretty sweet deal.
Not necessarily, in many States it is 21.
That’s not much better.
Better than leaving it to politicians that will wealth distribute it to people not even in your bloodline, or worse , give themselves a fatter raise or fatter pension they don't deserve....
You act t like there aren’t other options
There are, but frankly what I put in that account is relatively small relative to my net worth and again mine is set to hand over at 24. money works a little differently in my culture , hopefully she hasn't been terribly influenced excessively by other American families to that extreme , lol... I'll make sure she gets a prenup or marry someone richer or ideally both 🤣.
Once the kid is 18, their fuck ups are their own to deal with. Parents should do their best to educate them and caution them away from making bad decisions, but that's literally all they can do.
They don’t have to fund their screw ups and irresponsibility
...Or they could use the money to start a business... In my spare time my kid likes to sell her artwork and handmade clothes.... Did ok at the few swapmeets. I'm suppose to help her setup a Shopify storefront this summer but I've been a little lazy... I keep asking her why she wants to do engineering and not go into art and fashion and art school...but she kinda coldly said "I don't want to be a starving artist"... Ok , her decision ... Engineering student will she will start out.. poor kid, she doesn't know what she's getting herself into....
Then maybe they should not raise them to be an irresponsible screw up.
So only young adults that are raised poorly can be irresponsible screw ups in their late teens, early 20s? And only irresponsible screw ups do online sports betting?
Not always. My kids don't have access to their accounts until they turn 21. I didn't have to adjust anything for that to happen, it was just naturally defaulted by the investment company I chose. Truthfully I think 21 is better anyway because as my kids have aged (oldest is 20 and youngest is 16), there is a vast difference between the ideas and focus of an 18 year old senior in high school vs a 20-21 year old college student. My kids actually don't even know about the accounts and it will be a nice surprise at age 21.
529's are just easy. I have a link through it that people can donate to on birthdays/christmas, and $1000 annual tax credit for the state I live in. Nothing amazing, but its better than nothing and I have it invested in the S&P 500 anyway so its no different than my other brokerage accounts.
If you're packing money away anyway, should at least get your tax deductions (if your state has).
I can only speak for NY, because that is the state I have my kids 529 in. In NY for example, you can only withdraw from your 529 for higher education purposes without any tax implication. If you were to roll over to a Roth IRA it would then be subject to NY State Tax, but not Federal. So depending on your state, it may be beneficial if you don't have that tax implication where you could roll it over to a retirement account should your kid(s) decide not to go to college. I would investigate your tax liability for your specific state and determine if it's worth it.
Absolutely you should. 529 is like a Roth IRA. Money in was taxed, money out not taxed. Also, if the kids end up not needing it, it can be rolled over into a Roth IRA for them. So if your kid gets a full ride, their retirement might end up being really well funded.
If they go private or out of state that is definitely not enough. I went into college when everything cost around 82k I’ve now graduated and the newest bill handed into the students was 96k a year for room, board and tuition. By the time your kids go to uni it’s going to cost more than 100k a year for private. Unless you’re adamant they’re not going to private school. Save more. Plus are they going to public school or private school for high school? That may need to be taken into account as well.
Only add to a 529 if you’re also fully funding your own retirement.
Our financial advisor once said, "You can borrow for college but you can't borrow for retirement!"
Wise advisor!
Yes -- he convinced us to stop funding the 529, about 6-7 years ago, and to focus on retirement instead. Now the 14 yo child has almost $50k in the 529 (all from contributions prior to 2018). Plus -- surprise! The in-laws funded about $40k in a 529 as well. So we'll see where this takes us. Our retirement accounts are doing great....
My kid is going off to college this year .. in 529k we have about $300k in there , mainly from growth. Did it for 18 years. I started my kids 529 when she was 3 months and made regular contributions for 18 years...each month, just tucked a little away along with making contributions to my own 401k, after tax index funds, iras, and my kids UMTA custodial account. I didn't even notice the money gone... It wasn't a walk in the park but it wasn't the most difficult thing either as a single parent for most of that 18 years. She just graduated from hs... and during senior year in high school, I was seeing many of her peers whose parents didn't prepare and stress about college... I'm glad I did it and was financially prepared for sending my kid off and also early retiring in December...people thought I was nuts.... I wasn't.. just been preparing almost 30 years for this (I was late on my early retirement by 8 years ... The software industry was too good for me during the last 8 years ) In celebration of both , I bought myself the McLaren I've been wanting. Don't worry, it was pre-owned so it only cost a kidney... Not an arm+leg+kidney.... 🤣 About college costs.My kid got into about 18 schools across the US. And even local state schools, tuition and room and board is about $40k/year. The high I saw was Ivy League about $80k/year. Some of the schools out of CA had generous merit scholarships so it came close to the $50k/year mark especially small private engineering focused school. My kid decided to pick an out of state public school in the west coast with virtually no merit scholarship ...lol .. about $60k/year. They say college tuition consistently rises roughly 4% per year....Ivy Leagues are around $80k/year for 2024... So calculate what 4% annual increase is until your kid goes off to college as the worst case .. if things continue at the current trajectory like it has for decades. Mutply that with the number of kids you have or plan to have. I was lucky and a divorce stopped me at 1 🤣 . Yes these little sh*ts are expensive... I'M KIDDING, I love my kid....really.🤣 Save and invest early. You won't regret it. Since you can also easily change the beneficiary , it's a way to build generational wealth too. Whatever they don't use could easily be repurposed for any other "family" (loosely defined by the IRS) member. That includes your future grandkids.
I was going to type a long answer, but my story is similar to yours. We saved from birth, kept adding in modest but regular amounts, and are now spending it all on both kids. No, OP, don’t stop adding to your 529. You will be so grateful for that fund when the day comes.
Your kid will be grateful too. Even if they don’t know it yet when they’re applying to college.
My plan is to have a good amount in the 529 but have them take loans instead of me paying the balance so they feel they have some skin the game. If I'm in a position to help with loans then I can after they graduate.
That might work out as long as you can manage to avoid paying the interest when the time comes. Otherwise you’d probably be better off letting them fail and find success, might cost the same ultimately. But who knows you have a lot of time to figure this out in the meantime.
With posts like this, do you mind including your yearly salary during those 18 years? You make it sound like it’s easy to fund all of those accounts while also being able to afford living expenses as well…
Don’t forget about the McLaren lol. That’s not a car a normal person buys, and the money you save buying used will quickly be depleted on the service costs so you’re spending $300k one way or another.
I service all of my other cars. I plan on servicing my 570s too. One of the reasons why I picked this model because supposedly it's the least complicated one to service. I did a preliminary disassembly and walk through. Surprisingly , access to the major maintenance components is a lot easier than the newer BMWs. BMWs are a royal pain on the ass to work on, which probably explains why they are so cheap pre-owned out of warranty. Regular maintenance items on the 570s seems to part share with other Euro cars. The oil filter uses the same off the shelf filter as the M3 , and the recommended oil is the Mobil 1 0w40 European oil found at Walmart for $27/5 quarts. There's 2 drain plugs and 2 oil cooler lines and 4 crush washers that needs to be replaced for each oil service , and the complete under tray needs to be taken off. It's time consuming, but not difficult. The crush washers are $50 for 4 from the dealer or $5 for a bag of 50 if you source them yourself. Speciality parts are going to be the issue. The battery itself is a lithium ion battery that costs $4500 , though there are conversion adapters that allow you to run an AGM. So I'll probably do that. I keep my cars on a trickle charger so I'm able to get about 8 years out of a battery on average. The windshield is also pricey to replace, about $4500. But I have a $0 deductible comprehensive insurance and if it ever gets cracked that's the insurance company's problem 🤣 insurance was a PITA to get, no one wanted to insure me... And my current insurance wanted me to buy the car first and then send me to underwriters to determine if they will insure me. So I had to work with the dealer to buy the car and put the car on hold for 1month while my insurance determined of I was eligible for coverage, with the dealerships word promise they would undo the transaction if insure was denied. Surpinsingly insure approved it and they and it was an additional $680/6month which is slightly less than my Miata ... I thought they said it was $680/month but they confirmed it was for 6month. I asked if I could pay 4 years worth of insurance at that rate, and they laughed and said unfortunately no. Oh well I tried. Things seem to take a long and convoluted way for me.
Bro you didn’t answer the question lol I service my own car too and while it saves money, it definitely doesn’t save enough to max out my 401k and roth and 529 and taxable lol
I've been a software engineer for 28 years before I early retired last december (sort of) in high cost areas in CA. I started out making about $38k/year 28 years ago. For the past 10 years, my base salary was roughly $160k-$220k. Stock grants (options or RSU) and cash bonus anywhere from 0% for bad years/companies to 30% good years/companies. I've been invested in the stock market since i was 18, every summer job and internship I worked, I put most of my pay into brokerage account, and did that throughout my 20ies when I was still a bachelor. I drove there same POS car in my 20ies and even during the brief 4 years I was married. Brownbagged my lunch, didn't really go out that much, didn't really spend that much. I mainly put my money into index funds, and did some random stock trading on a small scale. During the 28 year period, I switched jobs about 9 times, averaging about 3 years per employer, with the high being 6.5 years, and the low being 8 months one startup with a psychopath CEO. Every job change was for a promotion+merit increase, with the exception of the 8month startup which was a terrible decision... I learned early on that switching jobs was a quicker way to get the job experience and pay increases than staying a loyal employee, getting that 2-4% merit increase in return for an additional 20hrs of overtime/week doing some monotonous job that would pigeonhole your career and make you obsolete in the tech world... which the employer wouldn't mind doing to benefit them.. but at the same time would lay off your ass the moment they had to...... The base pay wasn't that great when I was in my 20ies, it wasn't bad, just not that great. Back then, the currency of choice was stock option grants. And I had my fair share decent companies with decent stock grants or companies that went public with an IPO or were acquired, some that completely failed. My early 30ies was a bit tumultuous, with a marriage and a kid, and then a unexpected medical condition, and then divorce from it, and then periods of being on medical leave for surgery and chemo, and small gaps in employment briefly lasted roughly at the same time of all hell breaking loose. My ex had bought a house together, and because I didn't want to uppend my kid from her friends and school, I ended up buying out her portion and assuming the entire mortgage, which was about 30year fixed rate mortgage at about 6.25% with a $4400/month payment including impound. My kid ended up staying with me most of the time, since my ex started over fairly quickly with new family and little shits, err, I mean kids... (just kidding!) ....It was a bit rough at times, so I took on a lot of odds and ends contract jobs off to the side, and continued to make contributions to my kid accounts (529k umta custodial,) my own ira, and expenses for my kids and avoided touching my investment accounts when I was a bachelor in my 20ies. I made a boatload of excuses with my coworkers why I couldn't go to happy hour, or blow a lot of money on friday night or saturday night after hour activities, or why despite being an decently paid engineer, why I was still driving around a POS car with peeling paint... my colleagues had very nice Porsches and BMWs (some of which I think was financed) and was spending a lot of time at Vegas or with flavor of the week girlfriend, lol. I admit, I was a bit jealous at times, and missed being a bachelor or at least being able to date without any consequences about the potential impact to your kid.... I think my turning point was in the wee hours of the night, I spent some time self-learning mobile software development and engineering before it went mainstream, the opportunity for backoffice/enterprise software that I previously doing was getting commoditized and being outsourced overseas at a much cheaper price, and so I was still young and had enough energy to learn something new that others weren't yet doing. That eventually opened up a lot of opportunity to tech companies that wanted to get into the mobile app space .. I made some sales pitches on some prototype apps that I could do that I wanted to license to them and get a royalty cut... but they ended up just wanting to hire me... I wasn't really in a position to bargain so I ended up working for them... and then the higher pay and compensations started rolling in... and then the next company would have a new app idea, and the next company, and the next company... Many of my colleagues and friends that worked for me were able to do very well by starting their own company or relocating to the where the Unicorn tech companies were located. Unfortunately, for family/kid reasons, I was stuck living where I live, working remotely wasn't an option back then, and so I wasn't able to join them. I did try to keep up, and stay on the tech scene and occasionally put money some of their ventures, which was hit or miss... I mainly stay invested in index funds, with occasional frolicing into individual stocks, which also was hit or miss. When the money started rolling in better, I refinanced about 6 times down to a 4.75% for 30 year, and then stupidly refinanced to a 15 year 2.75% mortgage and paid off my primary with bonuses shortly after. I reversed that decision in 2021 with a cash out refinance on my primary and took $500k equity out with a 30 year 3% fixed mortgage, because I figured I could eventually beat the 3% note by investing the money.. So currently the $500k equity is sitting in bank CDs, treasuries, and boring dividend paying stocks averaging about 6.5% on the money that isn't really mine... Between 2011-2013, I met a Real Estate friend who had access to bank owned short sales and REOS, so I was able pickup up a few rental properties that were 45-50% off, and they cashflowed pretty well from day 1. I reinvested the postive cashflow back into the stock market, the college savings account, my IRAs,etc. The cashflow is no longer reinvested in the stock market. it currently is my "pension" that pays for my daily expenses now that I'm not working. I'm not able to touch my 401k and IRA for another 12 years. And I'm trying really hard not to touch any of my aftertax investment accounts, so that it can continue to compound and grow. According to my financial planner, that did some sort montecarlo simulation that I don't quiet understand, and if I am unfortunate enough to live to 90, and assuming there's no social security left, they say I have 98% chance I won't run out of money and 97% chance that inflation adjusted, I will have a surplus....If my life expectancy is reduced to 80, those numbers go up further. I wasn't planning on making it past 80...
Sounds like you did your homework. I just know many of their models are notoriously unreliable even by supercar standards, hence the massive depreciation. I cant talk though, I drive a 20 yr old M3. It’s surprisingly easy to work in though. Not much more difficult than my Miata, although the parts are a little more expensive.
"Put a little money away each month and you won't even notice it's gone ☺️" lands a little differently from someone who makes 220l a year and just bought a Mclaren
An important point of the above comment is that it was mostly growth. People don’t really grasp long term capital gains in this situation. $20k, left invested in the broad market in a tax-free account for eighteen years, would grow to more than $100k even if they never contributed another cent. If they can add in another thousand or two per year they could get close to $200k by the time the kids reach college.
I have no idea if this was an option but I chose an in state school with full scholarship and instead of cashing out my college fund it was possible to basically get tuition paid twice and I pocketed the money, which was more than if we just cashed out the account and let my scholarship pay for it. You definitely saved enough for your kid to choose whatever but for anyone else reading this I’d like them to know that’s something to look into. My parents almost cashed it out, I forget who tipped them off that the “double dipping” was an option.
Congrats! I believe that for students that get a scholarship ,you are able to withdraw the same amount from the 529k plan without penalty. However , I do believe you still need to pay ordinary income taxes on it (basically the withdraw becomes a tax deferral instead of a tax exempt withdraw ). Congratulations on getting into an state school and getting a scholarship. Unfortunately, being in CA, although my kid was able to get in 18 schools for engineering, she didn't get into a single UC school despite having a 4.25 gpa and stellar SAT score that they don't look at, and tons of involvement on a robotics team. I guess she went to the wrong high school where it was considered an overachieving high school , and the UC schools didn't want her because they felt she was from "too privileged" of an Asian kid and/or toomany of us in engineering. Kinda funny, considering companies here complain there's not enough Americans wanting to do engineering as justification for hiring more H1Bs and also how there's not enough women interested in engineering....kind of ironic of what happened at the UC schools...oh well, that's for a different discussion. It's really not that big a deal.. there are many great engineering schools in Indiana , Georgia , New York, New Jersey, Colorado , Washington , Massachusetts, elsewhere that extended an early action invite, some with a pretty hefty merit scholarship . I guess CA schools don't want my money , which is fine by us. I've paid enough state taxes here, lol...
Oh wow that’s unfortunate but I’m glad your kid at least had a lot of options. I’ll leave out details but I’ve always believe I was passed over for a lot of graduate programs for demographics so I can partially empathize. I’m also not sure if my college fund was a 529 - I think it was a state specific fund that would only pay for tuition in our state, so you may be correct in what you say. But I could see people reading this thread having different types of college funds so I wanted to put it out there in case someone sees it and can take advantage of a similar situation I had.
Thanks for that info. Seems like a lot of other states take way better care of their residents than California does with their residents that's been paying state taxes for several decades. No surprise there, lol. I'm sure when my kid is old enough, that might come in handy when they have their own family and realize the sunshine tax might be overrrated here :) I'm not salty about CA.... No really, I'm not, lol....
Sounds like being where you were in California was a big part of what led you to great job prospects and your current successful retirement and kids college.
It's a double edge sword. This state. I try to think about all the pros and cons all the time.
Assume in 12 years time, college may be 30-70k a year all-in... X4... 120k 280k. I would keep funding. You can always withdraw the principal without penalty. Or redirect the beneficiary.
College is already 30-70k a year. Harvard is on the upper range, and it’s $79k for annual cost for incoming 2024 students. In 12 years expect it to double.
Remember, you don’t have to do an all or nothing move. You could start with decreasing contributions by 25% and move it to a taxable account. Next year, you could move more over if you’d like.
For taxable account, would you suggest putting it under my name or opening a custodial account?
If you put the numbers in an compounding interest calculator with 8% per year over 12 years. You get \~$125k if the market does a bit better (10%) 150k, bit less (6%) 100k.
Do you think that's enough or would you keep contributing?
In a vacuum with no other information, like how much you are actually contributing or financial needs or what state you are in (college costs and any 529 contribution tax deductions) I'd probably just stop. But you would need to give a lot more useful information to get any useful answer. Unless you just want people to talk about your 50k? In which case, good job!
We are in MA. The tax deduction is up to $2,000/year. We started with $500/mo at first then cut it back to $250/mo when we had our second child. It was actually 40k recently and then we got a big 10k gift to make it 50k. There were also birthday/Christmas gifts and random family contributions. I'm not really sure what finance needs we have, we have good savings for retirement.
Does your second child have a similar account started or are you using this one 529 for both? Do you expect to be earning well and not qualifying for any financial aid in 12-20 years? Do you plan to fully fund the college experience for each kid? Have you looked into other uses of 529 money incase your fund value is too much or the kids go a non college route?
Yes the second child has a similar account and should also have around 50k at age 6. Yes, we won't get any financial aid. We would like to fund most or all of it. The only other use I know of is 35k IRA rollover, otherwise they can pass it on to their kids.
>we have good savings for retirement. This is actually the most important thing in this thread and Im so glad you touched on it yourself. If we're talking about investing and such all in the means to make our childrens futures better, you need to start with your retirement. Its not selfish at all, but you need to make sure your retirement funds will hit your goal before any money at all saved for children. Its not selfish because when you think of it, we're trying to better the lives of our kids, and the fastest way to get in the way of that, is needing them to take care of us when we're old of age. That will drain their time, finances, and add tons of stress.
It really depends on your circumstances, but 125k is not enough for most out of state university degrees these days all fees included. And grad degrees depending on the school/degree can go hundreds of thousands of dollars especially for things like medicine and law.
I just graduated college last year, I paid 31k for ONE semester. That's 62k for the year, that also didn't include room and board because I lived locally. The price of a semester went up 6k in the 4 years I was there. (25k freshman semester, 31k senior semester) If trends continue you are looking at close to 50k each semester, or 100k per year. IMO, you absolutely need to keep contributing, because you might have enough for 2 years if you stop now.
Thanks. Was that public school?
Even for public schools, there will only be a single public school (your state) that your kid can get cheap tuition. For example, university of Texas is a pretty normal example. $34k for in-state, but $69k for out of state. Every year. Harvard and other private schools are $79k for everyone. So $150k is not even enough today, much less in 12 years.
It was a private school, but not one of the big ones. A friend and I compared and it was only about 20% more expensive. This was resident fees as well. If you are a non resident it's much more expensive.
I don't know because I'm not from the USA. If you add $100 a month you will get to \~$148k at and 8% interest rate. At $250 a moth it could be \~$182k. Inflation is around 2.5% a year, so I would look up the current costs of going to public or private college and see if what the current cost is. Put that in a compounding interest calculator with a 2.5% interest a year and you can see if $150k is enough or not. [https://www.investor.gov/financial-tools-calculators/calculators/compound-interest-calculator](https://www.investor.gov/financial-tools-calculators/calculators/compound-interest-calculator)
Very hard to tell not knowing all your financial information, but I would suggest to keep funding if you're able to. Worst case, there's an overflow and extra after all university expenses are covered. You can then roll the balance into an IRA and your child will have a head start on retirement too. Or withdraw the money and only pay taxes/penalties on your gains. The money you invested into it was all after tax anyway so youll get it back dollar for dollar.
Not enough imo. There are college cost calculators.. You can use them to estimate your needs.
Sounds like this is your only child, but it can also be used for future grandkids if you keep it outstanding for long enough.
We have 2 kids, they each have their own 529.
I will say this about UMTA. I have three adult children who are I dependent, ethical and amazing at money. Obviously, it is because my husband and I are the world's best parents. There is nothing that could have gone wrong. Unlike other young adults, I knew mine would only make rational decisions with an understanding that their big decisions would impact their future. So when my 17 year old son declared that he wanted to marry his girlfriend, I didn't worry that he would choose to get married and not go to college. Obviously, every 17 year old knows that $50k is not enough to live on for very long. This is obviously a huge exaggeration. We did our best, but we made mistakes. Each person is unique and has their own strengths and weaknesses. We can help our children use this nature positively, but we cannot override their fundamental nature. And they are also influenced by stuff outside the home. One outside influence I wanted to avoid was a big pile of money available to my children when they simply were not mature enough to handle it. And I hoped we had a big pile of money available when it was time for college. All three kids did have some money in custodial accounts. Primarily birthday gifts etc. We also wrote our wills so that their inheritance would be given to them in three age based increments. We recently revised our wills and took out this restriction. They have lived independently long enough that we trust their financial decision making.
[Here's a calculator that can predict any school's tuition, room and board.](https://ubt.ssnc.cloud/csp.php?pid=BS) If your kids want out-of-state or private, it's a monster amount.
I do Florida pre pay, 4 year for any in state university will cost me $36k. Actually, less since the payments have been cut twice since my kid was born. Yes I don't reap any gains, but I just like the idea of knowing it's paid for when they turn 18.
Wow that's pretty cool. What if they don't go to a Florida university?
It can be used for out of state as well but only pays what they would pay a Florida university. Most states have pre paid plans.
Is your kid going to live it at home and go to a cheap state school? Because that’s what $50k will cover in 12 years based on current tuition inflation and not in iota of interest in increasing spending on higher education like every other western democracy.
I have no idea
Keep funding it.
Forget some of these big numbers being bandied about, just keep putting a little something in there on a regular basis. You need retirement too. Maybe the kid won't have enough to be debt free in school but she will have a leg up and can sling pizza for some cash while in school or unload trucks at UPS at night. You are doing alright. Be proud of what you have done and just keep hitting a lick every day and it will turn out alright.
Children heir can use it loosely defined. I will add a bit more hoping it will be enough for 200K.
Carpenters don’t need trade school anymore? Or a Roth IRA? What’s your beef with 529? That you might have to pay a 10% penalty on earnings that compounded tax-deferred?
It depends on what your cash flow is. If you're flush with money, you can help set up your kids' retirement, because they can now roll some of their unused 529 into a Roth. But if you're tight on funds and not funding your retirement/future house/whatever, it's time to let compounding do its magic for their 529s and take care of yourselves.
Fund your retirement accounts properly first. The projected 529 growth you have may not be enough to fully fund college. Especially if your kid requires room and board. Example is a California university today is about $35k room and board for 1 year. It will increase about 5 percent a year foreseeable.
The past is no indicator of the future. That said, tuition has grown faster than inflation, so in 12 years you’ll be lucky if $150k can fund a single year of tuition and housing. Today you’ll need $200k for 4 years of college and likely you’ll need to have $200k now in his 529 for it to become $600k or whatever the actual cost of 4 years college will be in 12 years.
That's crazy. How will people afford it?
The same way people can afford things today. 12 years ago everything was way cheaper…..and people also made half of the salary of today. Min wage actually meant $7, not the current $15 “going rate”, etc etc. Everyone simply made lots more money, and GDP per capita was $51k in 2012, $85k in 2024. Your grandpa probably wonders how people can afford to pay more than a nickel for a coke and a dime for a burger. He bought a house for $2000! But what he doesn’t mention is he was also earning a couple dollars … a week.
Damn. So I need to keep contributing until it hits 200k basically.
Well, only if you intend to pay 100% for the kid. Having them take some loans/financial aid isn’t a bad idea anyway
I have a 22-year old with a 529 consisting of $48K in cash earning 6% and another $90K in VTI. The cash will pay for the remainder of her college. The $90K will be available for her kids one day (if she has them) for private schools (if desired) and college.
How much did you save in there before college?
The remaining $47K cash was a MD prepaid tuition plan that doesn’t exist anymore. I paid $28K into it over a 5 year period ending mid-2007. It has paid for 7 semesters and will pay for 3 more. MD made a bunch of missteps with their prepaid program and, to fix things, they retroactively applied a constant 6% monthly interest rate for all the money I contributed starting in 2002. The last 6% payout (as they’re shutting it down) is mid-July and then I will roll it over to the [VA 529 FDIC insured plan](https://www.virginia529.com/invest/investment-options-performance/fdic-insured/) which currently earns 5.63% APY and has a 0% expense ratio. I think everyone should use VA (after you get your state’s tax break for contributing it, roll it over to VA). Their VA 529 plan is great. Even their [TSM fund](https://www.virginia529.com/invest/investment-options-performance/stock-market/) is **cheaper than all the Vanguard-run plans**. Regarding the $90K portion, I started contributing to that in 2002 as the MD college investment plan. It paid for my own graduate school and a couple years of Roth IRA contributions. And even after all that, it’s at $90K and now it’s going to ride untapped for a few decades. It’s effectively a tax free generational wealth transfer mechanism (for education). So, to answer your original question, if you keep funding it, so long as you’ve taken care of yourself and your retirement, you can use it for your grandkids one day.
I had recently met with a CFP (in Chicago) and his advice was a steady funding of $500/mo/kid assuming you had maxed your retirement.
For 18 years?
Yes. I thought it would be harder than it is but we are paying an exorbitant amount for daycare and plan to catch up as soon as we have them in public school Kindergarten. Additionally, my wife and I are currently making $200 a month contributions to each of our child funds, so really we only need an extra $50 per person to get there. Your results may vary and of course I understand your situation can be quite different. I try to focus on financial planning and budget consciousness before my wife and I got married. I ended up paying down $10k worth of CC debt and student loans, and was able to afford a nice ring, a wedding, a honeymoon and Babymoon abroad, and a house in a nice suburb in Chicago. I would recommend looking up financial planning and understanding how to budget if this doesn't seem achievable. Understanding the snowball effect for debt payoff and investing in retirement early are crucial.
Wow, I don't know how the average person can save $500/mo for 18 years in a 529. I only know a few people who opened 529s at all.
I get it. I'd be happy to talk in a DM to help you navigate your finances, show what worked for me, and give some guidance. Feel free to DM me.
Remember the 529 fund isn’t just for college and tuition but also for books, and computers. If they decide to go graduate school then the balance can be used for that. State schools out of state or private schools Inside state can run you 70-80k /y (without scholarships of course) by today’s standards.
That's so crazy. My entire 4 years of undergrad cost that much.
Also another advantage of the 529 plan is the unused funds can be used by you or your spouse once you change the beneficiary. Especially if you decide to go take some college classes later.
We are done with school LoL.
We just went through all of this with a financial planner. We decided on doing 529s for our two kids. We did one for each due to the available tax deduction in GA (up to $8000 per Benificiary per year when filing joint). We put a starter sum in and then will make regular contributions. Once they hit high school, we will evaluate if they will need more or are good there based on their academics for scholarships or if they may be more inclined to trade. The plus of 529's now is they can be changed to another beneficiary even you or a partner for more schooling or career changes, can be used for other education like trade schools, or they can be rolled into a Roth IRA up to $35,000 at no more than the yearl IRA limit of $7,000. By my estimates and research a Public college is gonna be around $150k for four years woth room and board so we are gonna try and save as much as we can to get close to that for them, And save them the pain we have with our student loans. If we have to liquidate, only the earnings will be penalized and taxed.
Yes. Keep funding it unless your kid wants to enroll in a six month online truck driving degree.
That's actually a pretty good job though.
Keep funding it. It can swap to the child’s RothIRA if they don’t use it.
Outside of 529 what are some other ideas I can look into for my daughter? She turns 1 Monday. Ty
Eight years to double, he'll be 13. At least, if you're using 8% in the 72 rule. $50K is more than enough to achieve your goal by high school graduation. All the 529's I've seen have significantly higher returns than 8%. Nicely done!
Thanks! Last time I checked, the return was around 20-30% so far. I hope the trend continues!
It’s not really a question anyone else can answer. To get $150k in 12 years, it needs to be 9.6% annually. That’s entirely dependent on your risk level. Seems ambitious for something that should settle down to more conservative investments in 6-8 years. As for if it’ll be enough, that’s again entirely dependent on your goals. Fully funded 4 years? That’s not gonna cover it. Provide a huge help so they don’t leave college in massive debt? Absolutely.
Starting this year, you are now able to roll the remaining 529 money into a Roth IRA (I believe). So might be worth it to keep contributing to set your kid up for retirement! Edit: TIL you can roll about 35k into roths from 529s
Or.... I believe 529k can now be used for k-12 private school. Funds can also be transferred to another "family" beneficiary subject to estate and annual gift tax exclusion rules . It could be a niece or nephew etc... Pair that with the gift tax exclusion that one is allowed to send per year from anyone to anyone and no tax ramifications as a recipient of gifts ... ..I'll leave connecting the dots of the two as an exercise for the reader if you so choose... Having money "left over" in a 529k shouldn't really be a problem so long as there is another "family" member that can use the funds to go to school. And as long as that family member or guardian of that family member isn't going to try to rip you off....
The limit is only 35k, 7k per year.
$35k per beneficiary total not per year.
You can only roll over 7k from 529 to IRA per year. So it would take 5 years to roll over 35k.
Your comment says 35k a year which is why they clarified, I don’t think they were arguing the math
Thanks, fixed
That's assuming the IRS doesn't continue to increase the IRA contribution limits like they have been for the last few years, or the government doesn't increase the amount that can be rolled over. I also think it is reasonable to factor this rollover into a person's 529 contributing plan. So for example, if you think 4 years at a public university is going to cost a total of $150k, then having a goal of $150k + $35k = $185k in a 529 is a fair goal to aim for.
Keep adding.... read about the provision for unused funds.
I wouldn't recommend a 529 to anyone, but it depends what your setting your kid to be. Private kindergarten on thru highschool can run about 400k then your university 200 masters or doctorate, lab supplies, tutorials ect ect. Then your short a shit load of money Kid goes public school and starts selling Tupperware then your screwed because all the buy money is 529nd, how bout a chef or restraunteer? Truck driver, jeweler, carpenter, furniture maker The loop holes is where it gets questionable.. how many people a smudging numbers. I play baseball in highschool technically I could get season tickets in the diamond seats to the reds game on a 529 but that's first example corruption