My aunt set up a 529 savings plan for my daughter, who is two years old. She just let me know this month, and while I think that is fantastic, I asked how the money can be used, and what if my daughter doesn’t choose to go to college?
Dear Chestnut Hill Career Column:
My aunt set up a 529 savings plan for my daughter, who is two years old. She just let me know this month, and while I think that is fantastic, I asked how the money can be used, and what if my daughter doesn’t choose to go to college? In fact, I have been needing to finish my own educational plans since I dropped out of college a few years ago. Now with Covid, it is seeming like a good time to refocus on my own situation. I’m not in a rush, but I know I want to go back someday once I figure it all out. What do you think?
The new year is a good time to take a look at your career situation, your finances and where you see yourself and your family’s future. Pandemics aside, it is my experience that staying focused on the things most important to your health and happiness typically involve a level of thought and planning in this regard. More like a roadmap: generally knowing where you are headed, but knowing that everyone takes a wrong turn here and there. Sometimes those wrong turns are self-evident; sometimes, like during 2020, we are forced to accept changes we otherwise never would have considered.
Your aunt sounds like she has some foresight on educational expenses, and how a 529 plan can help in long term planning for educational needs. All fifty states and DC have at least one 529 plan and you can compare them by their % return, for example, if you are also thinking of setting one up. It is best to set one up early, like your aunt did, and of course consult with a financial advisor. If your daughter doesn’t choose a two- or four-year college, the monies can still be used for other programs or certifications she may choose so long as they qualify (check out savingforcollege.com and consult a financial advisor).
I did find an interesting article about the fact that adults/lifelong learners can set up a 529 plan for themselves to fund their own educational needs, so long as the monies go to a qualified expense for higher education. The Women’s Institute for Financial Education appears a good resource. wife.org/529-plans-not-just-for-kids.htm
Regarding your own future education, 2020 certainly didn’t give many people the money to save for their future, but if you consider your daughter will be headed to kindergarten in the fall of 2023 or so, use that date as a time goal to make your own plans. And by then, she will ideally be off to the classroom not in a kindergarten zoom class!
Rona Sisson is an attorney and also Executive Director with Mestel & Co., a legal recruiting firm with offices nationwide. You may email her your questions at email@example.com for the CHCC.