{ "media_type": "text", "post_content": "How much do you target in your kid’s 529? Given tuition inflation, and the vast cost difference across public and private schools, how do you think about a target number? I currently have ~$60k saved for my 8 year old and I’m wondering if I’m on track.", "post_id": "614cb60a2bf10f002344ce9d", "reply_count": 52, "vote_count": 2, "bowl_id": "5c133802e4f35d0012ad759f", "bowl_name": "Partners Only" }

How much do you target in your kid’s 529? Given tuition inflation, and the vast cost difference across public and private schools, how do you think about a target number? I currently have ~$60k saved for my 8 year old and I’m wondering if I’m on track.

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It is such a hard question to answer because of the differences you mentioned (I believe you can also use it for private high school just to make it more complex. There is also a tax penalty for having too much - although I believe you can shift to a different recipient. To set some reasonable targets I estimated 6 years at a state school versus 4 years at an Ivy League and estimate my now 8 year old son would require $400-$560k in 2031. I have been doing $8400 per since he was born and I’m sitting at $106k and I feel reasonably comfortable at the lower end of that range. I’m not too worried because my daughter is 12 and is probably a bit ahead on the same benchmarks, and I can absorb some outlays to finish each education if required.

Wow, you all have a lot. I have a college sophomore and a HS Senior. I had about $100k for the one in college when he started. He's going to an out of state - state school with a small scholarship. I'm going to need probably $57k more than the account has to cover the remaining 2.5 years. (although we bought a house where he lives so I'm not paying for housing after his Freshman year). My HS senior has about $125k in her account. She will probably go to a state school and that will probably be the right amount to cover her 4 years. If my HS student get into her dream school it won't be nearly enough but $400k/kid sounds really excessive unless you are planning to use it to pay for high school or you know your kid is getting into Harvard.

Out of state, state school was $53k -6k scholarship for first year. $14k of that was housing (there was a $2k reduction in housing costs last year due to Covid). We bought a house <1mile to campus this year so that reduced cost to $33k/year for Sophomore-Senior years. My other will likely go to a UC school and that will be around $33/year including housing. Competitive private colleges are $75k.

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Max this vehicle out. No one on this thread is likely to die broke so you should view this as a tax shelter that allows you to pay for your extended families school over time. Your kids, your grandchildren, your nieces, your kids sister-in-law. You are going to leave millions behind when you kick the bucket so why not have the joy of sending a bunch of kids off to college - or paying for the dyslexia school your brother cannot afford for his daughter? 529s are super flexible. A member of the family can be: Spouse Son, daughter, stepchild, foster child, adopted child or a descendant Son-in-law, daughter-in-law Siblings or step-siblings Brother-in-law, sister-in-law Father-in-law, mother-in-law Father or mother or ancestor of either, stepmother, stepfather Aunt, uncle or their spouse Niece, nephew or their spouse First cousin or their spouse

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In Virginia you can deduct your 529 contributions for each plan. So I was able to deduct 4x the max my having a plan for my 2 children and my wife had a plan for each of our children. Completely legit. We had 100k for each child and it came out almost exactly that for Virginia state schools.

We are both 49 and officially both kids are out of college with degrees. They both went to state schools so that cost was reasonable and we didn’t have them take out loans. I think all of you sound well prepared. For us, and this does not work for all, but we gave each child a yearly budget for school. If they wanted a more affordable school then no loans would be needed. If they choose to go over the budgeted amount we offered, then they could have our contribution plus they needed to take out loans for the remaining amount. We were not willing to drain our savings for tuition but also wanted them to have a head start in life. Our friends are spending $100k a year on college and we thought that was not something we wanted to spend. Both out of school, no debt for them or for us. And they got to choose to have skin in the game or not. Hope different perspective is helpful

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None. Planning to cash flow it.

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None w 3 kids. I put the money into realestate in a trust which I will get an equity line of credit as kids start their college journey to pay for the ones that go to school. Positive cash flow in rental will go towards equity repayment. I invested $200k in a down payment 3 years ago it’s worth $1,500,000 now. Property can’t be sold and is to pay for the next generation schooling until there is no equity left when drawn down. Balance of equity to go to charity when capped.

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I contribute upto my state’s tax benefit max. Plan to cash flow the rest.

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Your reasoning is correct assuming your tax free growth in 529 is equal to or less than what you would make after tax elsewhere. I have some investments that have better growth rates even when you account for paying taxes. Otherwise, I’d keep them in 529

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My daughter's college cost half of what I planned for when I put money in the 529. Because of investment returns, there's still almost the same balance after 3 years as when she started college.

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I saved $500 a month from age 1 in a 529 and have $125K saved for a kid that’s just started 8th grade. Actually stopped contributing now as that’s enough to cover 4 years at an instate public school already so I’m figuring with 5 more years of investment gains it should be enough to cover 4 years of school when they go and if it isn’t they can get a student loan, academic scholarship, or I’ll make up the difference from other savings.

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I have just under $250K per kid for 3 kids. That should cover them at a reasonably expensive 4 year school or pay for their masters at a State School.

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Saved $270k per kid - one in college now and one in high school. Private school tuition is ~75k per year. I told each kid they can spend it on undergrad and masters until gone then they spend for rest. If they want private college they need to fund their masters. If they go in state they will have some left for grad school.

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I’ve got three young kids and have tuition promise funded for all of them along with $25k in 529 for OOPs.

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Not sure why that is funny? All will be funded by the time they turn 18. Guess you don’t read too well…

Have $150,000 funded for a 4 year old.

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200k per kid. Although I could have paid the tuition just out of current income without any impact on our spending. Of course we didn’t know we could have done that when I started saving 18 yrs ago as a much poorer staff person.

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But… why would you want to cash flow it instead of using a tax advantaged vehicle?

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Currently at $225k each for 3 kids. Started the year they were born. Put in a lump sum in the beginning and then monthly contributions. Avg age of kids is 10. Target was/is 75% of expensive private college expected cost. This post reminds me to check if I still need to continue contributing.

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1k per month per kid since birth

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Just adding a vote for $1k per month per kid starting at birth. If the markets perform reasonably well you’ll have more than enough for a great private school and some left over for grad school or to kick start for your grandkids

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Not much. If I can pay for child care, activities, etc I figure I can pay for college.

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Mine just finished school. When he started we had 300k in his 529 and he used every penny. We ended up paying about 40k out of pocket over his 4 years. Now he’s in Grad school and paying his own way.

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So all good advice in these replies but is anybody else reading all this and thinking how crazy it is that sending your kid to college now costs more money each year than the median American income?

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Yep, it’s crazy inflation… higher ed needs to be / is being disrupted, but I expect there will always be a strong market for the top-tier institutions, and people like us who will support that.

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Don’t worry. Fund your retirement first. You can pay the tuition out of your TCC if you are still working when they are of age. Hopefully you will have the curse of smart kids. The best gift you can provide is a good education. And a bonus tip - even if you can afford to pay 100%, have the kids put some skin on the game with a loan in the max amount the school will offer. Likely about 10% of total cost. That way, when they graduate and want to go play in Europe vs get a job, there is an incentive. Teach them how to fish.

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Good lord…is all I have to say

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