Age 47, software engineer, ready to early semi-retire, but one big variable...

I've got a different sort of strategy for your consideration. Have your son apprentice in a trade for at least a couple of years. Mechanic, electrician, plumber, welder, auto body, whatever. Yes, it is blue collar, and yes, it is hard physical work. If he or you thinks that it is beneath him to get dirty and physically tired while working then it is likely even more important that he do something like this.

It will virtually guarantee that your son ends up a well rounded person with a strong work ethic and the ability to pay some of his own way with a reasonably well paid skill to fall back on should he become disenchanted with his college courses or end up with a skill that suddenly isn't in demand. He'll definitely appreciate the sacrifices that you are making for him, and he will be about 21 when he goes to college. If he is anything like me, by 21 he'll probably be able to tone down the partying and make a better judgement as to where his interests lie than at 18.
My parents had no money set aside for college. There simply wasn't money in the budget. Two of five of us went to college, and pretty much paid our own way. I was fortunate enough to get scholarships to cover tuition and books, and I think my brother got one semester paid. I made it through and certainly gained an appreciation for LBYM in college, but it could be stressful. Also when I hear some people talk about the college experience, I think about how I basically attended classes, crammed for tests and worked hard to finish my programming assignments, and worked at jobs. Wasn't a whole lot of time for the college experience other than football and basketball games. I rarely just hung out around campus. Oh, I partied hard too, but a lot more with co-workers and townies than other students.

My brother dropped out after nearly four years and a switch in majors, and a need for real income. He's done well for himself, but probably would've done better with a degree.

I suspect one of the other three siblings might have gone to college had it been easier. The other two didn't seem interested, but I don't really know. I know one is resenting the ceiling she is hitting now because of not having a degree.

I guess my point is that while those who paid their own way in college and finished may be better for it, there are probably lots who would've done better with a college degree had they been able to get some help.

For my daughter, who's a month away from deciding where to go, we're going to pay all normal expenses for a public school. I've told her if she wants to go to a private school, she needs to make a good case for it, like a much better program for her area of study. Also I'm not sure how hard she's been working to apply for scholarships. If it's all talk and no action, she's likely going to be looking at a loan if that's what she wants. Fortunately, she's been accepted to one decent public school, and her first choice is another, and I think she has a lot better chance of getting in there than the two privates she applied to.
Finding College for Choldren vs Your retirement

Our daughter (only child) graduated 2 years ago. We told her we would pay her expenses but she had to get in and out in 4 years. She did it in 3 1/2.

We were in a position to pay her expenses, so that was fine. Under no circusmstances would I recommend jeopardizing retirement. A possible delay--maybe.

Our daughter came to us within the pat month and said "thank you" for paying her expenses. She is recently married, and they are seeeing the very real struggle that many of their friends have paying back college loans, and trying to get houses, cars etc. Most of their frineds have debt of $25000-40000.

There is no right answer for everyone. It's what you can do, what you choiildren have done and can do, and what your and their long therm goals are. But at 18, you have largely fulfilled your obligations. You do not OWE them an education. But ongoing support, whether financial or emotional is key to long term success.
My parents paid for the first 2 yrs for me at a junior college. Then I was on my own. I think worked well, because it gave me some responsibility and forced me into some financial planning early on.

That was my route as well. I worked full time during the summer and part time during the school year then full time doing heating & A/C service until I started with the police department. Finished the BS part time along the way. I could have done it a lot sooner but I was busy playing with motorcycles, an airplane and girls.
I think you've got to do your planning step-by-step:
1) Ascertain the retirement fund you need for you and your wife first. Anything beyond this can be allocated to things like additional money for things like discretionary spending, children's edu, etc. This depends very much on the LOCATION of your retirement, and your LIFESTYLE. If you'd retire in affordable places like South America, rural USA, or Asia, you'd need less. If you want to become a Perpetual Traveler, traveling from country to country or county to county for the next 20, 30 years, then you'd need budget for the transportation and temp accommodation. But, the good thing is you may not need to keep your present house, which could be sold. To provide lifetime income, I suggest you have 2 streams of income: insured stream to provide survival income, and variable stream to provide additional income. You should buy an annuity to provide for your and your wife's survival income needs, say US $1000/m. The rest can be invested in a balanced portfolio. Experts suggest that a 'Sustainable Withdrawal Rate' is ard 4% pa. With this portfolio, you have more liquidity, but the value of it depends on the market value of your portfolio.

2) Ascertain whether you have been sufficiently insured against unexpected events like costly illness. Budget the premium that you need to pay every year for the insurance. Some insurance policies have level premium rates, while others have escalating premium rates. Set aside a fund for insurance premiums. You wouldn't want a major illness to deplete your retirement nest egg.

3) Then, research on the options of college education available. You could, for example, pay just US$10,000 for an online, 4-year, accredited bachelor degree program, or more than US$200,000 for another 4-year on-campus bachelor program at a private university. The difference is more than 10 times. Nobody can decide which is better. My personal opinion is that, if it's just a general degree that your son wants (not to advance to medical school), then you shouldn't spend too much on his bachelor's degree. The difference probably won't pay off in at least 5-10 years. Rather, think of the whole education plan he has in mind. If he wants a master's, then think of the most cost-effective way. For example, he could take an online bachelor's degree, and work part-time during the 3-4 years (he has flexibility to complete it in less than the standard 4 years). By the time he graduates, he'd have an accredited bachelor's plus 3 years' work experience. He may apply to study for a master's at a leading Canadian university (eg Toronto, British Columbia, Alberta or Waterloo University) for probably much less cost. The total cost of this plan may be less than US$60,000. And, he'd probably be earning some money along the way as a part-timer. The more important advantage, though, is he won't finish university as a greenhorn. But if he wants to become a doctor, then he probably wants an on-campus education in biology, chemistry, etc. and the tuition for an MD is going to be quite high, and this may eat up 50% of your life savings.
A very difficult decision.

My parents did not support me through college, although at the time I thought they should. As a result, went into a fair amount of debt to go to undergrad, medical school, and business school around 65k. It was limited due to a combination of going to state schools for undergrad and medical school,working and a fellowship that covered business school.

I'm not sure that kids can fully appreciate the true financial tradeoffs involved in funding school. I am planning on putting a fixed amount thats available (probably something akin to 100% of full state school tuition) and letting my children make the tradeoff. But I think kids need to make some of the tradeoff.
Top Bottom