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Old 10-29-2010, 12:48 PM   #21
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Originally Posted by SunsetSail View Post
If you did a similar exercise, do you care to share what total you came up with? I'm interested to see if I'm in the same ballpark as others. I front-loaded the 529 mainly to help annual cash flow and only plan on funding 45% with 529s, but that won't make a difference in expected costs.
I put together a spreadsheet and I seem to recall that saving $2500 a year per kid with some assumed growth rate would provide roughly $80,000 per kid for college. Using a higher-than-CPI tuition cost growth rate, I figured this $80,000 per kid would roughly cover future tuition costs of ~$20,000 a year (in another 12-17 years). Last year tuition here was $5000 a year. This year it is $7000 a year. Maybe time to update some model assumptions...

I should add that as we approach FIRE in possibly 3-5 years, we also acknowledge that there is a high probability that our portfolio will have grown significantly by the time our kids are in college. Which would allow us to help out more with college.

I haven't quite figured out how to handle 529 contributions for the ~7-9 years that we will be ER'd but before the first kid starts college. As in, do I fund the 529 to the level I want before we FIRE (ie work an extra 6 months??) or just hope for increases in the portfolio which leads to surplus withdrawals to allow funding the 529 over the years or for paying a lump sum in 12 years for college straight from the portfolio.
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Old 10-29-2010, 01:09 PM   #22
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Originally Posted by FUEGO View Post
I put together a spreadsheet and I seem to recall that saving $2500 a year per kid with some assumed growth rate would provide roughly $80,000 per kid for college. Using a higher-than-CPI tuition cost growth rate, I figured this $80,000 per kid would roughly cover future tuition costs of ~$20,000 a year (in another 12-17 years). Last year tuition here was $5000 a year. This year it is $7000 a year. Maybe time to update some model assumptions...

I should add that as we approach FIRE in possibly 3-5 years, we also acknowledge that there is a high probability that our portfolio will have grown significantly by the time our kids are in college. Which would allow us to help out more with college.

I haven't quite figured out how to handle 529 contributions for the ~7-9 years that we will be ER'd but before the first kid starts college. As in, do I fund the 529 to the level I want before we FIRE (ie work an extra 6 months??) or just hope for increases in the portfolio which leads to surplus withdrawals to allow funding the 529 over the years or for paying a lump sum in 12 years for college straight from the portfolio.
Thanks for sharing. I realized that I included some costs of living away from home in my assumptions and the public education cost is higher here (over $10K for UC). We've never intended the 529s to cover everything, but rather to take a very large chunk out of the portfolio cash flow drain and to hedge overfunding. I think there might be some learning experience in kids having to self-fund or even graduate with a bit of debt as well.
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Old 10-29-2010, 01:28 PM   #23
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Thanks for sharing. I realized that I included some costs of living away from home in my assumptions and the public education cost is higher here (over $10K for UC). We've never intended the 529s to cover everything, but rather to take a very large chunk out of the portfolio cash flow drain and to hedge overfunding. I think there might be some learning experience in kids having to self-fund or even graduate with a bit of debt as well.
We also did not want to overfund 529's. You never know what kinds of grants and scholarships your kids will get, and I didn't want to have to have money unnecessarily locked up in the 529. We get a deduction from state taxes for up to $5000 a year in contributions, so that saves me $350 a year.

We live near 2 good state U's. So the kids can keep living with us if things are really tight for us money wise. Or they can live in the dorms or get an apartment if they want to pay for it (via loans or working). Or maybe we will have more than enough money to pay for their lodging and other expenses too.

DW and I both paid most or all of our way through school with combos of loans, working, and scholarships/grants. It won't kill the kids if they have to pay for beer money and a shared apartment out of their own funds (or from loans). Character building!
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Old 10-29-2010, 02:29 PM   #24
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I actually don't believe that you do your children any favors by paving every road for them. Should you, as a parent, pave some roads so they aren't too bumpy? Yes. But if you pave every road and eliminate every bump along the way, your child won't learn what it means to work towards something, to overcome obstacles and then have the satisfaction of achieving it themselves.
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