The College Savings Challenge
As the father of two young children, I know the importance of preparing for their future education and getting ready, at least financially, for their college years. Whether you are a parent or a grandparent, you can start a 529 plan. Fidelity Investments conducted a survey a few years ago, which indicated that almost two-thirds of grandparents were willing to contribute to their grandchildren's college savings accounts. Hundreds of thousands of grandparents have already enrolled in 529 plans.
Many people are reticent to begin contributing because they are concerned that the kids might decide, when the time comes, that college just isn't something they want to do. Not to worry. There are options if that happens. You can always change the beneficiary to another member of the family. Pass the money on to "little sister" if "big brother" decides to do something else with his life. Or perhaps you'd like to take some night school classes or finally finish that degree you've put off. You, as the parent, can name yourself as the beneficiary. Another option is to take the money out of the plan, but that's really not such a wise thing to do unless you really need the money. Earnings growth will be taxable at your income rate plus an added 10 percent penalty.
There are a variety of Internet sites that will help to guide you through the college savings process. You might check out HYPERLINK "http://www.SavingForCollege.com" www.SavingForCollege.com. The site offers blogs and message boards so you can see what others have experienced. There is a large amount of information that will help you find the answers you need to effectively build the college nest egg your kids will need when the time comes for higher education. Other Internet sites to check out include HYPERLINK "http://www.CollegeBoard.com" www.CollegeBoard.com and HYPERLINK "http://www.CollegeSavings.org" www.CollegeSavings.org, and don't forget to check your state's 529 and pre-paid college plans. Some states offer a wide variety of programs, some that are not tied to the stock market, while other programs offer a wide range of investments and tax benefits to help you reach your objectives.
As I always say, just do it, even if you start by putting a few bucks away in a savings account every payday. Just do something while you search for the right vehicle to assure your kid's higher education. Just start and do so as soon as possible. Saving for your college education might seem an overwhelming task right now, but with proper planning and practical goals, reaching the cost of any college is definitely within your reach. Just do it - start today.
Originally published in the Outspoken e-newsletter.