Anyone Retire when your kids are in college?

[Tyrone]

Hello,
Fairly new to this site and not sure if this post is in the correct section. Curious if anyone retired once kids were in college and helped them pay for their higher ed? It's crazy to me that schools charge in large part based on income, and wondering if that helped push anyone into retirement at that stage of their lives and how that worked out.
Thanks for the input!
Tyrone

 

[MI-Roger]

There are a few posters in that category. What you need to remember is that the FAFSA form your child or you submits during January/February of their Senior Year of HS is for the calendar year that encompassed half of their Junior and Senior years of HS. Therefore, if your child is graduating in June of 2019, then any move to decrease income or shield income from FAFSA consideration must have been executed by December 31st of 2017.

Anticipate that thousands of other parents will be doing the same thing, meaning schools will not be handing out bags of free money based on this early retirement maneuver, and you may be 'shooting yourself in the foot' by decreasing your household income at a time you may need a maximum income to meet the EFC. As far as the schools think, any parents who can afford to retire early, especially immediately before a child enters college, MUST have money stashed somewhere to pay for the retirement and college costs. The forms are drafted on the assumption that everyone is honest. I imagine each School's final analysis includes a provision for flags indicating levels of dishonesty based on incongruous answers.

Each school charges every student the same initial fees amount for tuition. What varies is the Discount awarded by the School based on academics, financial need, athletic prowess, and the school's desire to enroll a specific student for other reasons.

 

[mrfeh]

Hello,
Fairly new to this site and not sure if this post is in the correct section. Curious if anyone retired once kids were in college and helped them pay for their higher ed? It's crazy to me that schools charge in large part based on income, and wondering if that helped push anyone into retirement at that stage of their lives and how that worked out.
Thanks for the input!
Tyrone

Yes.

Not sure how many schools base aid on income. The standard FAFSA uses all assets, not income.

 

[jkern]

Yes, I retired in August 09 and my daughter started college in September 09. My ex-wife and I split the cost 50/50 to put her through college. My former employer paid for her college tuition. My portion for 4 years was $40K.

 

[erkevin]

My son entered college in fall 2014, I retired in June 2016. We went with the thirds plan; 1/3 parents, 1/3 loans/ 1/3 child (scholarships, working, etc). We "donated" in the neighborhood of $35k to his education

 

[kite_rider]

Just filled out the FAFSA for my son this week.. Even though I've not had 'income' (at least in the traditional sense form from w*rk) over the last 5 years since I was FIRE'd; we still ended up with an EFC well into the six figure range.

The form asked you for the net worth of all of your assets; stocks, business, real estate, etc. Maybe you could lie about what you have, but that's not my style and I would hope that there are repercussions for that.

The FAFSA is not like an ACA subsidy situation where you might be able to engineer a MAGI for a specific year and get a benefit. Maybe I'm wrong about this, that's why I read these forums!

 

[RobLJ]

We waited until about 5 years after the youngest graduated. As a poster indicated, we were at max income and DW was getting a yearly bonus that we used to pay school costs (we had a second on the house to finance both sons' college, but turned out not having to use it), pay off the mortgages, and max contributions (the market run-up helped a lot also). That period set up my semi-retiring 5 years later and DW retiring 6.5 years later.

 

[big-papa]

That's our plan, though the exact date isn't yet known. Daughter graduates in June 2019 and starts college that fall. Sometime between then and 4 or 5 years from then we will most likely retire.

 

[daylatedollarshort]

We had our assets mainly in FAFSA exempt asset classes so our kids had grants for in state, public school tuition. Between grants, community college, paid internships, tutor jobs, tax credits and transfer AA degrees college has not been a huge expense for us. One has graduated so far in a high demand major and has a great job so it seems to have worked out well.

You can have a $100M in assets in our state and qualify for state grants if the assets are in FAFSA exempt classes like a personal residence, small business, retirement accounts, etc. The income limits were close to the ACA income limits for us.

 

[youbet]

Hello,
It's crazy to me that schools charge in large part based on income, and wondering if that helped push anyone into retirement at that stage of their lives

It does sound like you need to do a deep dive into the FAFSA forms and guidelines. If you can afford to FIRE, your relevant assets may be significant enough that you'll receive no/little aid anyway. And you would have just cut off your income. So, dig in and work your specific numbers.

kite_rider's post (a few above this) is a good example.

 

[retiredunder50]

Here are a few things to think about:

1. The FAFSA applications that are currently being filled out (process now starts in Oct) are for the 2019-2020 school year and are based on the 2017 tax year info.

2. For the schools that utilize FAFSA data, you could have Millions in assets but it is really income numbers that drive the consideration of assets in EFC calculations. If you can figure a way to keep your total AGI in retirement to less than $50K (you can always draw down from cash savings), your assets will not be factored in the EFC calculations. You must be eligible to file a 1040A (I don't know if the tax changes starting this year impact the form required..). I believe if your AGI is less than $24K, you will have a zero EFC.

3. Children's assets are counted much more heavily than parents' assets. Spend down child's money before filing or have it significantly counted against the child.

4. Similarly, the student income level, after somewhere around $6,600, will reduce aid by 50 cents for every dollar earned.

5. There are lots of additional ways to save money:
- community college first 2 years
- scholarships
- use funds from 529, coverdell, savings bonds
- when filing taxes, calculate optimal credit/deduction between American opportunity credit (usually the best), Lifetime learning credit, Tuition & fees deduction adjustment (if it gets approved again), business related education expenses if child is working for the business,... (NOTE: don't double dip)

6. Disregard above if school requires CSS profile.

I don't believe the FAFSA income numbers are ever indexed, so the numbers above are close. Even worse, the asset protection number (amount of assets not counted in EFC based on age of older parent) has gone down dramatically over these last few years).

I retired just before my first child entered college. I had another one finish in May & have one more to go (currently sophomore in HS). So far, so good.

 

[Hermit]

Plans are great. Sometimes reality and plans don't work together real well...

I retired the summer DS was supposed to graduate from college. That was 5 years ago. I am hoping he graduates this spring. Yes, I have been paying his education and living expenses all this time. No FASFA or any other help financially. Too much income even in retirement. His costs have been switched to loans the last few years, but I back the loans 100% at the credit union which keeps his interest rates low and my money locked up. I didn't try to cut the savings/income very close at retirement, so all is going OK.

 

[Al in Ohio]

I retired when my oldest was half way thru college and my youngest was only a sophomore in HS. My youngest is now applying to colleges while I begin my third year of ER. One caveat is that I already knew my oldest got a full tuition merit scholarship and had a hunch my youngest would get something similar (I will know for sure in 4-6 weeks from now). Those scholarships were not a deal breaker, but they helped with my projected budget.

Our deal with the kids was we will pay all room and board anywhere and they pay tuition and expenses. We helped them get jobs each summer from ages 14 thru 18 to earn four years of expenses and book money. I anticipate both will earn merit scholarships for most or all their tuition. I saved enough in a 529 plan for each for the full room and board and then some.

 

[copyright1997reloaded]

I retire the first time when my child was 7 years old, so I guess that fits the theme outlined by the OP. Since then, I reentered the work force, first part time and then sucked into full time (college level teaching). DC is now a junior in high school, and I am trying to figure out my eventual 2nd retirement plan.

Part of me wants to go as soon as DC enters college, as I would then be free to travel/relocate. But who knows until that happens, where DC decides to go, etc.

In terms of FAFSA, I'd guess no help if it is based on my income/assets. However, DC's mom and I have been separated for a long time, so we are looking at options in terms of FAFSA filing and custody.

 

[Al in Ohio]

Forgot to mention in regards to FAFSA that I did not expect any worthwhile aid. We filled it out once for each kid in the October before applying to schools as recommended by each college and then quit filling it out once enrolled. For us it was an exercise in jumping though a hoop, but as others have stated, for those of us with net worth to retire early, expect nothing. I mean cmon really?

Oh and this year for my youngest son the FAFSA had the option of pulling my income and holdings data from my 2017 tax form which I gladly chose to do. I sent in accurate honest data and it took about 10 seconds. Much easier. Took my kids tax form info also.

 

[Tyrone]

Thanks to all for the replies and input. I should have mentioned that I was looking for those who have had experience(s) retiring when kids are in a CSS profile school, as that is where kid number 1 is a frosh and kid number 2 is told she will be going by coach/admissions office and kid number 3 is looking. My mistake on that request for info.
Almost all of our assets are in retirement plans that we contributed to more than 2 years ago and we do have a fairly large percentage of our home equity tied up in the mortgage (75%?), so from a FAFSA and CSS profile perspective, we are doing well. (Our EFC is actually just over 14k, not that CSS schools use that info much). Because child #2, a current h.s. senior, was recruited for track, we have the benefit of an early financial read and know that her cost after work study and subsidized loan to be about 17k. We also have the kids contribute to their own costs (10% of total cost of attendance plus the amount of their subsidized loans are their costs. They can choose when they pay that off, or not take at all and give mom and dad the cash. In child number 2's situation that's $3,500 plus $1,700 out of $17k or $5,200/30%). My main thrust for this post was to find out how parents who retired when kids are in school deal with the large uncertainty of the cost of school.While one is in and one will be in, a third is looming in the wings in high school and so we are looking at a total of 8 more years of college costs as parents. While most of the uncertainty has been removed, as an older parent, I have been reducing my income/working less this year and next with an eye towards a retirement glide path and a way to see how reduced income impacts our lives on a step down basis. Thoughts?

 

[Offgrid Organic Farmer]

I retired in 2001. That year our eldest son turned 16 and that same year he started at a community college fulltime.

Our younger son was not ready to finish highschool until 2 years later. He went to Job Corp for vocational training and eventually into the US Army.

 

[MichaelB]

I retired in 2001. That year our eldest son turned 16 and that same year he started at a community college fulltime.

Our younger son was not ready to finish highschool until 2 years later. He went to Job Corp for vocational training and eventually into the US Army.

But you farm and are also a landlord. I would hardly call that retired.

 

[Offgrid Organic Farmer]

But you farm and are also a landlord. I would hardly call that retired.

Retirement is different for each of us.

You do what you want to do, and I will do what I want to do.

I got a pension and I was able to quit wearing a uniform and firearms everyday. To me this is retirement.

 

[MichaelB]

Retirement is different for each of us.

Sure, no disagreement there. I posted that for the benefit of the OP, who might believe retirement meant no more economic activity.

 

[RE2Boys]

Hello,
Fairly new to this site and not sure if this post is in the correct section. Curious if anyone retired once kids were in college and helped them pay for their higher ed? It's crazy to me that schools charge in large part based on income, and wondering if that helped push anyone into retirement at that stage of their lives and how that worked out.
Thanks for the input!
Tyrone

I retired at 50 before my boys graduated.......from pre-school (one and three year old at time)

My initial hope was that they would qualify for financial aid when the time came. But started educational/529 savings plans for them shortly after their birth. Currently have both boys in college.
Financial aid can be based primarily on income for those with limited financial assets......in my case the expected family contribution (EFC) is primarily based on assets (figure 5-6% of eligible financial assets contribute to EFC each year), and the EFC exceeds the projected cost of college as both boys chose to attend state schools, so no need based financial aid forthcoming. One does have a partial scholarship based on merit. Thanks to the compounding growth of the stock market over the last 20 year period, I'm hoping that I'm not faced with 529 plan money left over. The 529 plans have so far fully covered their eligible expenses. I have provided each with an auto (7-8 years old but low mileage) and pay for insurance and auto repairs. They are each responsible for covering the cost of their own entertainment, electronic devices, and discretionary purchases....neither has ever asked for spending money. They both have had summer jobs since they were 13 years old.

 

[retiredunder50]

I retired at 50 before my boys graduated.......from pre-school (one and three year old at time)

.....One does have a partial scholarship based on merit. Thanks to the compounding growth of the stock market over the last 20 year period, I'm hoping that I'm not faced with 529 plan money left over.

In the year your child gets scholarship money, you can withdraw from your 529 up to the amount of the scholarship without having to pay the 10% penalty, BUT you will have to pay taxes on the earnings. If you do end up with surplus 529 funds, you could use it for yourself, other family members, or perhaps grad school for your children

 

[daylatedollarshort]

My main thrust for this post was to find out how parents who retired when kids are in school deal with the large uncertainty of the cost of school.While one is in and one will be in, a third is looming in the wings in high school and so we are looking at a total of 8 more years of college costs as parents. While most of the uncertainty has been removed, as an older parent, I have been reducing my income/working less this year and next with an eye towards a retirement glide path and a way to see how reduced income impacts our lives on a step down basis. Thoughts?

We retired early and it is great. Our kids received grants for tuition for in state, public schools and even if they did not there are many good value schools and majors in our state. San Jose State costs $8K, the top tech companies hire from there and starting salaries can be $90K. We showed our kids the Job Outlook Handbook and Payscale reports by college and major and told them they had pick a good value school in a major that would lead to actually getting a job in a self supporting career. Now there is The College Scorecard with even more info along the same lines.


Added - I should have posted San Jose State costs $8 in tuition. Room and board would be extra for students not commuting.

 

[copyright1997reloaded]

We retired early and it is great. Our kids received grants for tuition for in state, public schools and even if they did not there are many good value schools and majors in our state. San Jose State costs $8K, the top tech companies hire from there and starting salaries can be $90K. We showed our kids the Job Outlook Handbook and Payscale reports by college and major and told them they had pick a good value school in a major that would lead to actually getting a job in a self supporting career. Now there is The College Scorecard with even more info along the same lines.

Do you have a link to this? I would like to get this for my child to 'study'. Thanks.

 

[daylatedollarshort]

Do you have a link to this? I would like to get this for my child to 'study'. Thanks.

Job Outlook Handbook
https://www.bls.gov/ooh/

Payscale - salary potential by college, college ROI, salary by major, best value colleges by major.

College Scorecard
https://collegescorecard.ed.gov/


California has transfer degrees in the community colleges where the students get a contract, ensuring their credits transfer to the 4 year schools and they can graduate in no more than 2 extra years in their desired majors, which also helps keep costs under control. Plus it limits the number of years we had to pay for health insurance, which was expensive for us once we stopped working. Even with the ACA subsidies our Bronze plan deductibles are not cheap.