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Delay RE to help children grad school costs?
Old 05-08-2017, 07:26 PM   #1
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Delay RE to help children grad school costs?

I am grateful to find this site and are learning everyday from the posts.

DW and I are both 50, and our plan was to be fired in 7 years when our youngest DS finish college. Recently, looking at our numbers, I think we can do it in 3 years. And some of the times, I am tire of the job demands, just want to be fired now. A couple questions:

1. Will you delay your RE dates to help your children grad. school cost? I already told all of them that they are on their own if they want to continue after 4 years but in the back of my mind, I kind of want to scarify and work a few more years while we have pretty decent earnings.

2. I have 500K in previous employer 401K account, any advantage/disadvantage to move it to a Vanguard IRA?

Some of our details:

- 4 kids, 1 will starts grad school this year. 1 graduates (4 yrs) next month and plan to go to grad school in 2 yrs. 1 is Freshmen in and 1 is a Soph in HS.
- Combined Salary: $220K
- Combined 401K: $1.15M 50/50 (is it too conservative?)
- Rentals Equity: $1.2 M (per Zillow) yields $55K annual net income
- Small non COLA pension: 12K annually starts at 55
- Primary home equity: 600K. plan to pay off when RE or sell and move back to one of the rental.
- After tax accounts: 400K in cash/saving accounts
- College accounts for the 2 youngers are 75% funded
- Current annual expenses $98K

Thanks
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Old 05-08-2017, 07:47 PM   #2
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Understand the desire to get kids launched into successful careers without debt. My two are a few years away from undergrad work, so take the following for FWIW.

Late wife I and set aside a given amount of money, and that it is it. Four years of state schools plus grad school, or undergrad out of state, pick one. Scholarships could change that. Have periodic conversations with the oldest about the budget, and that there will be no loans for any of it.

To your situation, I would not go back to work, or keep working, to fund grad school for my kids. I'm working with mine to help them understand the economic consequences of their college decisions (won't be $200K Art History majors or Harvard BA school teachers in my house). If they didn't get it right the first 4 years, the next one is on them. If they want to pick up an MBA a few years out of school, they should plan on paying for it themselves, or have their employer subsidize it.
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Old 05-08-2017, 08:01 PM   #3
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When my 2 kids were supported by us during college, they could not get any grants, scholarships, or other financial aids, because we made too much or owned too much assets.

One child graduated last year, has been working and saving for a gap year preparing for graduate school. His tax status is showing as independent on FAFSA because he supported himself last year more than 6 months. His asset is very little. FAFSA does not verify parents' assets for graduate schools. He ended up getting a scholarship from a school, and grants from government. These plus his savings, he can support his graduate school at least the first year. He will also have work study funds and plan to work in the summer. He will also plan to apply for TA.

I think we may not need to provide much for his graduate school.

Maybe you children can support their graduate school study the same way?
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Old 05-08-2017, 08:07 PM   #4
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1. Will you delay your RE dates to help your children grad. school cost?
I would not. If they want to go to grad school, they can find a way to do it. It might serve to concentrate their attention on the cost of this step, and help them think early about the need to find a way to pay for it. Are the years of your life worth less than theirs? Yes, you now earn more $$/hr than they will, so you can pay the costs with fewer hours than they will--but there's nothing wrong with them starting out pinching pennies right out of school. It can teach some important lessons and develop useful habits.

Quote:
Originally Posted by fire53 View Post
2. I have 500K in previous employer 401K account, any advantage/disadvantage to move it to a Vanguard IRA?
Main factors:
1) In some cases, 401Ks enjoy protections (from creditors, lawsuits, divorce settlements, etc) that IRAs do not enjoy. I believe this may differ according to state laws.
2) >IF< your 401K plan document allows it, you can take unlimited penalty-free withdrawals from your 401K if you terminate employment after age 55. Not all plans allow this, but some do. Otherwise, you'd need to wait until age 59.5 to have unlimited withdrawals (same age as an IRA). If you quit at age 57, this could be a factor in your planning.
3) The options in your 401K and the costs of investing there compared to the Vanguard IRA option.
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Old 05-08-2017, 08:22 PM   #5
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Not grad school. But I did retire when my youngest kid is a junior in college. That's a delay already, we were thinking of retiring in her sophomore year. But we pay for everything at a state school.
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Old 05-08-2017, 08:33 PM   #6
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Purely a personal call, albeit with financial implications. We stated that we would not pay for grad school. Ended up paying for masters in accounting for son who chose less prestigious, high-scholarship undergrad institution, as opposed to the "elite" schools that the other two chose. In the end, this "evened out" the amounts spent, so we were ok with it.
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Old 05-08-2017, 08:33 PM   #7
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It is 100% up to you what you choose. You sound like you're not completely adverse to delaying retirement.
Quote:
I kind of want to scarify and work a few more years while we have pretty decent earnings.
1)
I retired while my kids were in middle school - now in HS and middle school (HS next year). College is ahead of us. We've funded the 529s to a 4 year state college level. I'm not worried about the quality of the school since our state schools include UC Berkeley, UCLA, UCSD, Cal Poly SLO, etc. If they want to go to grad school we'll help them if we have the cash flow - but won't feel obligated. There are usually much better scholarship, grant, and work study opportunities as grad students. (Who do you think teaches all the freshman courses. LOL).

2)
Advantage to rolling over 401k to an IRA - you have total control over investments and their associated expenses. Also you could do a 72T for drawing down some before 59.5.

Disadvantage to rolling over 401k to an IRA - 1)in many states 401ks are exempt from lawsuits/bankruptcy, etc. 2) Most (not all) 401ks allow you to start taking withdrawals at age 55 or older without penalty - if you separate from the company at age 55 or older. You'd need to check the plan summary to confirm if your 401k supports this. (It's allowed, but not required, under the tax code... so not all plans support it.)
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Old 05-08-2017, 09:15 PM   #8
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Did your parents pay for your school and delay their retirement? Did they even retire? My parents,did not pay for college, it wasnt even a consideration on their part or ours ( i have 3 sisters all 3 graduate school, one was a PhD. I thought i was a sport paying for my sons college as long as he earned A's and B's.(b's got paid at 50 %) u need skin in my game. Im a hard liner, my life in my eyes was rough, i made his life easier by comparison. What ever you chose you cant go wrong, this is a real personal choice.
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Old 05-08-2017, 10:47 PM   #9
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Told DS that I would fund up to a certain dollar amount... which is what a 4 year degree would cost based on the various web sites that estimate these things...

He could stretch this to more than 4 years by going to a lower cost university (not by a lot) or getting scholarships (so far only $3K, but we are hoping for some more).... or by working during the summer and using his own money to supplement what we give (we will see as this is his first summer)...

But, I am already retired so I made my decision already.... it will not change... however, DW is trying to get a job so she can 'help out' if needed...
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Old 05-09-2017, 06:29 AM   #10
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Like others have said, it is enntirely your decision. But when I was in grad school, 9 years ago, I paid my way with a 20hr job/week during the academic year and a 30hr/week job in the summer. In state tuition to be sure, but I paid for a 2br apartment for myself and always had plenty of beer money.

One of my office mates darn near paid her way by applying for obscure scholarships every week. I understand prices in many schools' costs skyrocketed the past decade, but a little price shopping should go a long way.

My point is, I hope you don't feel any guilt if you let your adult offspring provide for themselves.
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Old 05-09-2017, 07:19 AM   #11
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I didn't even consider working to help my boys with college let alone grad school. They were 1 and 3 years old when I retired 17 years ago. But it is your life, your children, your decision.

At the time, I knew my income would be low so hoped that they would be eligible for some financial aid. But did set up 529 plans, and the power of compounding, and inherited some EE savings bonds eligible for educational benefits, all is good for four years at state U. and no loans required.
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Old 05-09-2017, 07:59 AM   #12
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Im sort of in the middle class n this. I'm helping my DD with dental school (she is also taking out "forgivable" loans where she has to commit to working in-state for a number of years and the debt is wiped). I'm doing it to extent I can afford - I would NOT have delayed ER for it, however. No way
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Old 05-09-2017, 08:28 AM   #13
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You are people of means, however that still doesn't mean you've got unlimited resources to throw around. A college degree today is a very substantial expense.

While most of my friends were on the 5 year college plan, I was out and working (on my own) in 4 years. Without student loans, I felt my parents had fulfilled their obligations to me.

My best friend put his 2 children through the best private schools through high school. The daughter went to one of the fancy Virginia private universities and is now in OB/GYN oncology residency. The son went to a private military university and is now in the Army (in combat). The parents sold the big house and are living in a luxury apartment. Dad is going to have to work until age 70 while all his buddies retired 15 years earlier. $2 million was spent on the kids' education.

Like my father said, a 4 year public university education was good enough for us. And if we wish to go to graduate school, we should find a way to pay for it.
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Old 05-09-2017, 09:29 AM   #14
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Quote:
Originally Posted by fire53 View Post
I am grateful to find this site and are learning everyday from the posts.

DW and I are both 50, and our plan was to be fired in 7 years when our youngest DS finish college. Recently, looking at our numbers, I think we can do it in 3 years. And some of the times, I am tire of the job demands, just want to be fired now. A couple questions:

1. Will you delay your RE dates to help your children grad. school cost?
If they are planning to study something that is worth a premium when they work, they will either qualify for scholarships and grants, or be fairly easily able to pay down any debt with their salaries.

If it makes sense, it is like a mechanic who needs a fairly expensive set of his own tools. He finances this through his earnings.

Give them a chance to grow up, although I know that growing up is not fashionable today.

Ha
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Old 05-09-2017, 10:05 AM   #15
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We covered out son's undergrad at 100%, so he graduated with no debt. We were very clear about the fact that any additional education would have to be self-funded. Good idea? Who knows, but it worked out well for us...
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Old 05-09-2017, 10:59 AM   #16
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I wouldn't pay for grad school. DW got her Master's by tuition assistance paid by her employer. The Air Force paid for most of mine (thank you taxpayers!). Personally I think a Masters is more valuable after a few years of work experience anyways.
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Old 05-09-2017, 12:54 PM   #17
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Another data point...

My sister had two kids... oldest is not a go getter, but smart as heck... after graduation she did not know what she wanted to do so went to law school... sis did not pay for it.... now, at that time I was single and did help out a good bit IMO, but she did get a good number of student loans...


Her second child graduated in the 08/09 timeframe... was not able to get a job anywhere (engineer)... so, signed up for graduate school and did some TA work and was paid for that and got free tuition... sis did not pay anything for him either... I do not know if he got any loans....


So, as others have said, if they really want to get that extra education there is a way and they will find it.... I just do not think it is the parents responsibility to provide it to them....
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Old 05-09-2017, 01:21 PM   #18
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As others have said, it's a personal decision. But my parents helped me and my siblings with grad school and I am eternally thankful for their sacrifices. But you should also consider the situation of the kids - is this grad school an extended "fun" time at school or a real commitment to a higher earning future. Are they the type that have a good work ethic and try to cover some of their costs when they can? Have they made the most of the educational opportunities available?

What is the likelihood they could get other assistance and are they evaluating the costs or just assuming you'll pick it up?

All of these things might influence me, although again, it's your decision.
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Old 05-09-2017, 01:22 PM   #19
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Welcome Fire53! If you haven't found them already, we have a helpful list of things to think about before making the decision to ER:

Some Important Questions to Answer

Delaying ER to help your kids with grad school expenses is strictly a personal call. We would not have done so, as we told both kids that we would pay for 4 years, period (and then only if grades were good, etc.). Both graduated and are doing well.

Interestingly, DS decided after 3 years of work to go back for a PhD in engineering, where most everything is paid for through his research, so he doesn't need any help from us (although we have offered - he saved enough while working to pay for anything not otherwise covered). DD, who works in marketing, is now seriously considering law school to go into public interest law of some kind. Unlikely that she would get much financial help, at least up front, and DH and I are likely to help her out in some way. But it's an extra gift, not anything we feel obligated to do.
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Old 05-09-2017, 06:31 PM   #20
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Like FlaGator- we saved a healthy chunk for college- should cover 4 years at a state school if they are careful. If they have money left over they may keep it (After degree is in hand). My parents gave me the same deal- I got a scholarship for undergrad, and the leftover funds (along with a job) paid for a car and MBA. I graduated debt free. My brother took extra time to get a degree and had a little debt- my sister graduated debt free. BTW, we are retiring with a 10 and 13 year old, so not helping with grad school
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