How America Saves for College 2015” report, nearly nine out of 10 parents plan for their child to attend college, yet less than half are actually saving for it.
With tuition continually on the rise, failing to save early for college may ultimately affect your retirement. By the time little Johnny reaches college age, you may have to choose between helping him and having enough to live on during retirement. Guess which option most parents choose? You can avoid having to choose between your children and your retirement by starting to save for college now.
Equally important to saving now is choosing a smart savings vehicle. While 529 plans are well-known savings options, there are two alternatives that may better suit your family’s needs.
A Coverdell Education Savings Account offers the ability to grow earnings on a tax-deferred basis and to withdraw them tax free for qualified educational expenses.1
Another highly effective college savings method is a Roth IRA.1 Your contributions can be accessed at any time tax and penalty free.2 In addition, many people are unaware that earnings may be distributed penalty free for qualified educational expenses.3 What’s more, if your child decides not to attend college, the money is still available to supplement your retirement income.
To talk to an investment consultant about the savings option that may be best for you, a Coverdell or Roth IRA, call 866.621.1787 or email firstname.lastname@example.org.