Military Officer - August 2008 - (Page 46)

financialforum College Prep With the cost of a college education on the rise, it’s important to start saving early. Phil Dyer, CFP, provides some planning tips to help you make the most of your money. H Start Saving Early For College Costs ■ MOAA offers the Vanguard®Degrees of Success 529 College Savings Plan to help you start saving for college. Visit www.moaa .org/529 for more information and to sign up. igher education costs are increasing at twice the rate of inﬂation. The College Board estimates for a child born in 2004, a fouryear education at a public college will cost approximately $128,000, and four years at a private university will cost approximately $304,000. With the average college senior graduating with about $20,000 in student loans — and an increasing number graduating with a six-ﬁgure debt — the numbers are getting scary. What can a parent or grandparent do? Get a game plan in place early, and stick to it! Consider the following: Start saving early: Saving $100-$300 a month in a tax-advantaged section 529 college savings plan from birth or early childhood goes a long way toward covering the cost of a public university education. Plans owned by grandparents or other relatives currently have a minimal effect on ﬁnancial aid calculations and will pay dividends long after your grandchildren have outgrown gifts of clothes or toys. Stay away from custodial accounts: Uniform Gifts to Minors and Uniform Transfers to Minors accounts — better known as custodial accounts — used to be primary college savings tools and provided families the opportunity to shift income from parents or grandparents in a high tax bracket to a child in a lower tax bracket. Recent tax law changes, however, have made custodial accounts a poor 46 MILITARY OFFICER AUGUST 2008 choice for most families, because “kiddie tax” rules now apply to children under age 19 and full-time students under age 24. If you already have money in a custodial account, consider spending it down for items that directly beneﬁt the child, such as summer camps, private secondary school, a computer, or other allowable expenditures and starting a 529 plan instead. Also, tuition payments made directly to a college or university are exempt from the normal $12,000-per-donor-per-year gift tax exclusion and a great way for grandparents or other relatives to help. Decide who will cover college costs: Discuss — as a family — what you or other family members will cover, and then communicate that decision to a wouldbe student. For instance, a parent might decide to cover four years of the average in-state tuition, room and board, with anything on top of that his or her child’s responsibility. There is no right answer, but don’t wait until spring of your child or grandchild’s senior year of high school to discuss this in detail. Do your research: Visit www.ﬁnaid.org to review the basics of college aid as early as possible. MO — Former Army Capt. Phil Dyer, CFP®, is deputy director, Beneﬁts Information and Financial Education. To ﬁnd a ﬁnancial planner near you, contact Garrett Planning Network at (866) MOAA-GPN (662-2476) or www.moaa .org/garrett, or visit www.moaa.org/ﬁnancial center for other resources. PHOTO: SEAN SHANAHAN http://www.moaa.org/529 http://www.moaa.org/529 http://www.finaid.org http://www.moaa.org/garrett http://www.moaa.org/financialcenter http://www.moaa.org/garrett http://www.moaa.org/financialcenter

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Military Officer - August 2008 Contents MOAA Online From the Editor From the President Your Views MOAA Directory Rapid Fire Washington Scene Chapters in Action Financial Forum Ask the Doctor MOAA Member Services Cover Story: A Stronger Voice Virtual Combat Mental Floss Steady as She Goes Pages of History Faces of MOAA Member Books Information Exchange Advertising Index MOAA Calendar Sounding Taps MOAA Scholarship Donors Encore

Military Officer - August 2008

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