College or Retirement

1
College or Retirement
2
Philosophy of Money

• What was money like for you growing up?
• Creatures of habit
• Contrarian view

3
Expectations of Money

• Are your expectations realistic?
• How do you manage expectations?
• --for yourself
• --for your family
• Consider the idea of good enough

4
Preparation

• The retirement of the future
• College education resources
• Educating yourself and your children about money

5
Retirement of the Future

• People are living longer
• Defined Benefit Pension Plans are a thing of the
  past
• Over 2/3 of all retirement assets are
  self-directed
• Baby Boomers may want to work longer, travel and
  volunteer more than ever before

6
The Cost of College

• Tuition for in-state residents at the average
  public university
• 30 years ago - 655
• Today - 6,000

7
The Cost of College (contd)

• Unsustainable Debt Loads
• Student borrowing has doubled over the past
  decade to over 53 billion
• Average debt level for graduating college seniors
  is nearly 20,000 - many owe 100,000 or more
• Source The College Board, 2008

8
What can be done?

• Enhance our philosophy of money
• Include children in on-going education
• Set realistic expectations
• Consider preparing for both college and retirement

9
Expectations for MoneyEducating our Children

• The value of money
• Budgeting
• Small scale
• Family budget
• High school job
• College years
• Post college

10
Strategies for Saving - Retirement

• Determine the goal early
• Plan to save at least up to the 401(k) match
• Start early and save regularly through automatic
  payroll deduction
• Take advantage of professional management through
  target retirement funds
• Make use of tax-advantaged savings plans to
  maximize savings
• 401(k) IRA
• Roth IRA SEP IRA

11
Strategies for Saving - College

• Determine the goal early
• Plan to
• Save as much as possible of the total cost
• Borrow 10 or less if possible
• Pay for 10-15 from current income and non-loan
  financial aid
• Start early and save regularly through automatic
  investment plans or payroll deductions
• Make use of tax-advantaged savings plans to
  maximize savings
• 529 Savings Accounts

12
What is a 529 Plan?

• Education savings plan designed to help you set
  aside money for future college costs.
• The 529 account is in the name of the beneficiary
  but the money is controlled by you.

13
529 Tax Advantages

• Tax-deferred growth
• Distributions are tax free if used for qualified
  education expenses
• Contributions qualify for the annual gift tax
  exclusion limit of 12,000
• note the earnings portion of non qualified
  withdrawals may be subject to federal income tax
  and a 10 federal penalty tax, as well as state
  and local income taxes. The availability of tax
  or other benefits may be contingent on meeting
  other requirements.

14
College Savings Iowa 529 Plan

• Tax benefit to Iowa residents -2,685
• Funds can be withdrawn tax-free to pay for
• Tuition, fees, books, supplies, room and board
  
• Upromise rewards
• Note-If withdrawals are not qualified, the
  deductions must be added back to Iowa taxable
  income

15
You can do it!

• Remember-
• Its a marathon, not a sprint!

16
Appendix Sources of Aid

• Applywise.com
• Hope Credit
• Lifetime Learning Credit
• Tuition and Fees Tax Deduction
• Academic Competitiveness Grant(ACG)

17
Disclosures

• For more information about the College Savings
  Iowa 529 Plan, call 888-672-9116 or visit
  www.collegesavingsiowa.com to obtain a Program
  Description. Investment objectives, risks,
  charges, expenses, and other important
  information are included in the Program
  Description read and consider it carefully
  before investing. Vanguard Marketing Corporation,
  Distributor and Underwriter.
• If you are not an Iowa taxpayer, consider before
  investing whether your or the designated
  beneficiarys home state offers any state tax or
  other benefits that are only available for
  investments in such state's qualified tuition
  program.
• College Savings Iowa is an Iowa trust sponsored
  by the Iowa state treasurers office. The
  Treasurer of the State of Iowa sponsors and is
  responsible for overseeing the administration of
  the College Savings Iowa 529 Plan. The Vanguard
  Group, Inc., serves as Investment Manager and
  Vanguard Marketing Corporation, an affiliate of
  The Vanguard Group, Inc., assists the Treasurer
  with marketing and distributing the Plan.
  Upromise Investment Advisors, LLC provides
  records administration services.
• The plans portfolios, although they invest in
  Vanguard mutual funds, are not mutual funds.
  Investment returns are not guaranteed and you
  could lose money by investing in the plan.