My DW and I need some help thinking through a retirement scenario.
Currently we are planning to retire before our two kids begin college as we do not want to spend our last working years collecting a paycheck that we will need to turn around and give to the yet-to-be-selected colleges for tuition. We have ~ a 10 yr through 16 year horizon on this, and want to position our kids to have access as many scholarships, grants or loans as they can receive. Has anyone seen strategies helping people think through this?
Here is our scenario....
First, our goal would be to retire in the tax year our first child finishes their Sophomore year of High School as I believe college tuition assistance reviews two years of taxable income when determining grants, loans and scholarships as well as how much tuition a child's parents can afford.
Second, seeing that we will retire before 55, in addition to our traditional retirement plans, I am deferring some of my compensation (pre-tax) to afford us some flexibility between when we retire and when I turn 59.5. This pre-tax comp deferral is not beholden to the pre-59.5 yr withdrawal penalties and, when we begin to withdraw funds, we are trying to minimize deferred comp income during our kids college years.
Third, we are trying to structure our mortgage payment to continue until our 2nd child finishes their senior year in college. While we are accelerating mortgage payments to align our final payment to when our 2nd child finishes their senior year of college (~16 yrs away), with current interest rate of 3.625, we do not feel paying it down faster is prudent as we believe having a mortgage payment will help offset income and position our children for grants, loans or scholarships.
Fourth, we do contribute ~$6k annually to a 529 for each child. We have considered stopping these contributions completely and reallocating any contributions to our retirement, but have not moved in that direction yet.
With all that said, I believe colleges determine grants, loans, etc by looking at income, expenses (e.g. Mortgage) and current bank assets, but do not look at retirement plans.
Any experts in this area who can point us in the right direction?
Thanks....
Currently we are planning to retire before our two kids begin college as we do not want to spend our last working years collecting a paycheck that we will need to turn around and give to the yet-to-be-selected colleges for tuition. We have ~ a 10 yr through 16 year horizon on this, and want to position our kids to have access as many scholarships, grants or loans as they can receive. Has anyone seen strategies helping people think through this?
Here is our scenario....
First, our goal would be to retire in the tax year our first child finishes their Sophomore year of High School as I believe college tuition assistance reviews two years of taxable income when determining grants, loans and scholarships as well as how much tuition a child's parents can afford.
Second, seeing that we will retire before 55, in addition to our traditional retirement plans, I am deferring some of my compensation (pre-tax) to afford us some flexibility between when we retire and when I turn 59.5. This pre-tax comp deferral is not beholden to the pre-59.5 yr withdrawal penalties and, when we begin to withdraw funds, we are trying to minimize deferred comp income during our kids college years.
Third, we are trying to structure our mortgage payment to continue until our 2nd child finishes their senior year in college. While we are accelerating mortgage payments to align our final payment to when our 2nd child finishes their senior year of college (~16 yrs away), with current interest rate of 3.625, we do not feel paying it down faster is prudent as we believe having a mortgage payment will help offset income and position our children for grants, loans or scholarships.
Fourth, we do contribute ~$6k annually to a 529 for each child. We have considered stopping these contributions completely and reallocating any contributions to our retirement, but have not moved in that direction yet.
With all that said, I believe colleges determine grants, loans, etc by looking at income, expenses (e.g. Mortgage) and current bank assets, but do not look at retirement plans.
Any experts in this area who can point us in the right direction?
Thanks....