529 plans were originally created in 1996 as a tax-advantaged way to save for college. Over the past several years, Congress has expanded the ways 529 plan funds can be used, making them a more flexible and versatile savings vehicle. College, plus other education expenses A 529 savings plan can be instrumental in building a college fund — its original purpose. Funds contributed to a 529 savings plan accumulate tax-deferred and earnings are tax-free if the funds are used to pay … [Read more...]
Child Care Costs More Than Housing
For a family with two young children, the average annual cost for child care in 2023 was higher than the cost of mortgage payments in 45 states and higher than the cost of rent in every state. Here is a comparison of regional costs for housing and child care for two children — an infant and a four-year-old — in a child care center. Source: ChildCare Aware of America, 2024 Link to Printable PDF: 2024 11 November Newsletter IMPORTANT DISCLOSURES ERB … [Read more...]
Social Security 101
Social Security is complex, and the details are often misunderstood even by those who are already receiving benefits. It's important to understand some of the basic rules and options and how they might affect your financial future. Full retirement age (FRA) Once you reach full retirement age, you can claim your full Social Security retirement benefit, also called your primary insurance amount or PIA. FRA ranges from 66 to 67, depending on your birth year (see chart). Claiming … [Read more...]
The Potential Benefits of Roth IRAs for Children
Most teenagers probably aren't thinking about saving for retirement, buying a home, or even paying for college when they start their first jobs. Yet a first job can present an ideal opportunity to explain how a Roth IRA can become a valuable savings tool in the pursuit of future goals. Rules of the Roth Minors can contribute to a Roth IRA as long as they have earned income and a parent (or other adult) opens a custodial account in the child's name. Contributions to a Roth IRA are made on an … [Read more...]
Key Retirement and Tax Numbers for 2022
Every year, the Internal Revenue Service announces cost-of-living adjustments that affect contribution limits for retirement plans and various tax deduction, exclusion, exemption, and threshold amounts. Here are a few of the key adjustments for 2022. Estate, Gift, and Generation-Skipping Transfer Tax The annual gift tax exclusion (and annual generation-skipping transfer tax exclusion) for 2022 is $16,000, up from $15,000 in 2021. The gift and estate tax basic exclusion amount (and … [Read more...]
When Two Goals Collide: Balancing College and Retirement Preparations
You've been doing the right thing financially for many years, saving for your child's education and your own retirement. Yet now, as both goals loom in the years ahead, you may wonder what else you can do to help your child (or children) receive a quality education without compromising your own retirement goals. Knowledge Is Power Start by reviewing the financial aid process and understanding how financial need is calculated. Colleges and the federal government use different formulas to … [Read more...]
Building Blocks for Financing College with Less Debt
Financing a college education with the least amount of debt involves putting together a variety of resources in the most favorable way for your family. It requires planning, savings discipline, an understanding of financial aid, smart college research, and good decision making at college time. Your College Fund Your savings are the cornerstone of any successful college financing plan. It's helpful to think of your college savings as a down payment on the full cost, similar to a down payment … [Read more...]
Paying for Graduate School
Maybe you've decided that graduate school is the path to advancement in your current job or your ticket to a better career. Or maybe you just want to take a few classes to upgrade your skills. Either way, returning to school as an adult often involves financial sacrifices. How will you pay for it? Personal savings, financial aid, employer-funded tuition, and private loans may be available to you, and education tax credits might help out at tax time. Calculate the costs Before you jump into … [Read more...]
Teaching Your College-Age Child about Money
When your child first started school, you doled out the change for milk and a snack on a daily basis. But now that your kindergartner has grown up, it's time for you to make sure that your child has enough financial knowledge to manage money at college. Lesson 1: Budgeting 101 Perhaps your child already understands the basics of budgeting from having to handle an allowance or wages from a part-time job during high school. But now that your child is in college, he or she may need to draft a … [Read more...]
Spring Cleaning Your Way to Better Finances
Spring is a good time to clean out the cobwebs, and not just in your home or apartment. Your personal finances can benefit from a good spring cleaning, too. Here are some questions to ask yourself regarding your budget, debt, and taxes. Is there room in my budget to save more? A budget is the centerpiece of any good personal financial plan. After tallying your monthly income and expenses, you hopefully have money left over to save. But... is there room to save even more? Review your budget … [Read more...]
