While many retired clergy choose to enjoy their well-deserved season of rest, some seek ways to continue nurturing their spiritual calling.
Most parents aim to help their children to graduate from college debt free. That’s why using a college saving strategy that provides tax advantages and a rate of return that keeps up with inflation is important. In the second of a two-part series, we discuss two of three options to consider when investing for college savings (See part one of the series for information on option one, 529 plans).
1. Coverdell Education Savings Accounts (Coverdell ESA): similar to 529 plans, these are accounts offering tax-free investment growth when the funds are spent on qualified education expenses, including K-12 education expenses. We will see how they are different from a 529 plan next.
Main characteristics of a Coverdell ESA:2
2. The last option we will detail is a Roth IRA. It is a retirement savings vehicle, so its main purpose isn’t saving for college, but some parents find that it works well as a college savings tool, too. Let’s look at the details.2
How Much of Your Child’s College Education Should You Pay For?
As a general rule of thumb, you can aim to save at least 1/3 of the projected future college costs, which assumes you can cover the remaining 2/3 with your current income, the student’s part-time job income, and financial aid, like scholarship funds and student loans.
While financial aid can certainly help cover some of the costs, all financial aid isn’t created equal ─ student loans need to be repaid.
Students and parents who borrow too much for college can end up with a considerable debt burden that could last for years after graduation. The news is filled with stories of young adults with excessive student loan debt. The key is to save as much as you can before college to limit the amount you might need to borrow.
So don’t wait to start saving. Even a small amount saved each month can have a dramatic effect when it comes time to pay that college bill.
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Translations of any materials into languages other than English are intended solely as a convenience to the non-English-reading public. We have attempted to provide an accurate translation of the original material in English, but due to the nuances in translating to a foreign language, slight differences may exist.
Las traducciones de cualquier material a idiomas que no sean el inglés son para la conveniencia de aquellos que no leen inglés. Hemos intentado proporcionar una traducción precisa del material original en inglés, pero debido a las diferencias de la traducción a un idioma extranjero, pueden existir ligeras diferencias.
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Watch a guided tutorial of our enhanced site to introduce you to important new features designed to help you live your life with financial confidence.
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