How do I save for my children's college education?
The best college savings vehicle in place today is a 529 College Savings Plan. The State of Colorado has an excellent one. In addition, there are Coverdell Education Savings Accounts, custodial accounts and other accounts that can be useful when saving for college.
A Colorado resident can contribute to Colorado's plan this month and remove the money to pay for education next month, but still receive the state tax deduction. 529 plans are long-term investment vehicles with a variety of investment options available, including super conservative stable value funds or money market funds, fixed income funds, as well as funds geared for moderate and aggressive growth. One of the biggest advantages of the 529 plans is that your contributions will grow tax-free as long as the money is used for college education.
We can guide you in choosing the right account for your education funding needs. Also, we will happily calculate the savings required for your child's education based on expected rates of return, years and type of education to be funded, and inflation of college costs.
However, rule number one is save for retirement first, children's education second. You will potentially spend millions of dollars in your retirement and hundreds of thousands of dollars on your child's education. Your child has many years ahead of him/her to pay college debt at reasonable rates, however, upon retirement, you are out of time and you better have saved enough money.
Back to FAQ