Published by Taylor Financial Group
Q. Dear Debbie: When is the right time to start planning for our kids’ college?
A. Actually, the answer is sooner than you probably think. If your child (or grandchild) is starting high school this fall, now is the perfect time to start preparing yourself, and them, for college. You may be thinking – do I really need four years to prepare? I say “YES!” There are tons of requirements and deadlines to think about and keep track of! Not to mention the huge expense and financial planning that goes into it. I can tell you firsthand that it can quickly become overwhelming!
Putnam Investments recently released a Four-Year Action Plan to Prepare for College. Here are some key takeaways from Putnam’s plan:
- Freshman Year – Increase saving in a 529 plan. Encourage other family members to get involved. Remember that withdrawals for tuition, room, and board are tax free!
- Sophomore Year – Consider tax-smart strategies and the impact of income on federal financial aid (FAFSA).
- Junior Year – Determine the Expected Family Contribution (EFC) for financial aid. The EFC process factors income from the “prior prior” year. Note that increases in income may affect aid (i.e. income from the sale of a stock or a Roth IRA conversion).
- Senior Year – Complete the FAFSA form (between October 1st and June 30th) – the earlier the better, as money runs out.
Because there are so many different factors that can affect college savings, it’s a very good idea to meet with your financial advisor to make sure you’re doing everything you can to maximize college savings and benefits.
If you have any questions about planning or saving for college, give us a call. We are happy to review and discuss your situation with you, and see if there is any way we can help.
Putnam Investments, Four-Year Action Plan to Prepare for College, May 2017
Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual.
Before investing, the investor should consider whether the investor’s or beneficiary’s home state offers any state tax or other benefits available only from that state’s 529 Plan.
Securities offered through Cetera Advisor Networks LLC, Member FINRA/SIPC. Investment advisory services offered through CWM, LLC, an SEC Registered Investment Advisor. Cetera Advisor Networks LLC is under separate ownership from any other named entity.