CASE STUDIES

Pay for College and
Protect Your Retirement

The Challenge: Ryder and Kyla have two children, Kramer age 17, and Fletch age 14. Ryder is a pharmaceuticals executive and Kyla owns a dermatology practice. Both plan on retiring in the next five years however each education is projected to cost over $300,000. Ryder and Kyla want to help fund educations for their children but do not want to jeopardize their retirement.

The Strategy: Ryder and Kyla contact Tushingham Wealth Strategies and inquire about their “Personal CFO” planning services. After the first meeting, they quickly learn that “true” college planning goes well beyond just opening a 529 account and encompasses areas such as college selection, tax aid, and financial aid. They engage Tushingham Wealth Strategies to establish college plans for both Kramer and Fletch, as part of their retirement plan.

• Ryder and Kyla assume that they will not be eligible for any financial aid, based on their incomes. They soon discover that Kramer would be eligible for a substantial amount of merit aid at an out of state private school. Based on Kramer’s academics the aid would most likely come in the form of a scholarship and allow them to afford the school with minimal student loans.

• Since Kramer works at Kyla’s practice they discover how Kramer’s income would make him eligible to claim an education tax credit worth $2,500 a year. Initially, Ryder and Kyla had disregarded the credit since they did not qualify for the credit on their tax return.

• Ryder and Kyla had planned on paying for the educations from assets earmarked towards retirement. They realize that this would require them to work an additional five years. Tushingham Wealth demonstrates how targeting specific schools can substantially reduce education costs, not require them to spend down their retirement assets, and retire as planned.

• By going through the college planning process Ryder and Kyla can confidently begin preparing for Fletch’s education and their retirement. They also learn that college savings vehicles could help defray the cost of Fletch’s education.

The Results: Both Ryder and Kyla are comforted to realize that they can afford to send both children to college and protect their assets and income for their pending retirement. Not only will both children receive an education at top-rated schools, but they should also graduate with minimal student loan debt. This will better prepare their children so they can begin saving immediately after college for their own financial goals.