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Yahoo
2 days ago
- Business
- Yahoo
'I Don't Need Millions—Just $300K' People Motivated To Retire Early Share The Smallest Amount Of Money They Consider 'Life-Changing'
In the world of FIRE—that's short for financial independence, retire early—there's a lot of talk about hitting the $1 million mark. Some aim for more, especially with inflation, rising home costs, and uncertain market returns. But one Reddit user posed a simple question that cut through the big goals and got people thinking smaller: "What is the smallest amount of money that would be life changing?" They followed it up with a scenario many can relate to: "If you were gifted x amount, how would it change your life? To get you closer to a FIRE lifestyle. For example, I often think, if I 'just had an extra $300k' I could pay off my house and change to part time work." Don't Miss: Maker of the $60,000 foldable home has 3 factory buildings, 600+ houses built, and big plans to solve housing — Peter Thiel turned $1,700 into $5 billion—now accredited investors are eyeing this software company with similar breakout potential. Learn how you can That number—$300,000—struck a chord. It wasn't just a wild estimate. It was practical, down-to-earth, and repeated over and over. One user wrote: "$300k would be the number for life changing for me and my family." They explained exactly why: "That would mean the last little bit of school debt goes away, selling our current home and moving out of town a ways to a property with at least an acre of land. It means college savings for kids, a little bit of padding to retirement, and two newer used vehicles that aren't 10+ years old." They added, "I could do all that, probably with a few bucks left over." Another put it bluntly: "I don't need millions, just $300k." Trending: Maximize saving for your retirement and cut down on taxes: . Others went slightly higher. One user said, "$300-400k is probably what it would take for me to seriously reconsider any of my current plans." One response pegged the minimum closer to $400,000. "Anything less would be great but not life changing." That amount, they said, would allow both partners in the household to semi-retire permanently. There were some who shot higher. One said they'd need at least $1 million post-tax to feel a real shift in their life. Someone else responded that $500,000 would still mean five more years of work, and only $1 million would bring their timeline closer to two. A few were stuck in a limbo of liquid assets and fear. One user said they had $120,000 nearly liquid but were still too scared to buy a home. Another said, "$60,000 would be enough for me to make a down payment on a house, which feels like the next big step in life." But they also admitted, "I have 100k saved in the stock market, and I'm just so attached to it at this point."The answers were scattered across the map—from $100 for a babysitter and a nice dinner out to $3 million for a stress-free early retirement with part-time work on the side. But $300,000 kept coming up. Not as a dream number, but as a number that felt real enough to change everything—without making anyone rich. As one person summed it up: "10k would just be debt. $100 would be a babysitter and a nice dinner out for my wife and I." So maybe the real benchmark for FIRE isn't just hitting a fat portfolio number. Maybe it's about figuring out what would let you breathe, slow down, or finally move out of a rental and onto your own land. And for a surprising number of people chasing early retirement, that number isn't seven figures—it's $300,000. Read Next: Image: Shutterstock UNLOCKED: 5 NEW TRADES EVERY WEEK. Click now to get top trade ideas daily, plus unlimited access to cutting-edge tools and strategies to gain an edge in the markets. Get the latest stock analysis from Benzinga? APPLE (AAPL): Free Stock Analysis Report TESLA (TSLA): Free Stock Analysis Report This article 'I Don't Need Millions—Just $300K' People Motivated To Retire Early Share The Smallest Amount Of Money They Consider 'Life-Changing' originally appeared on © 2025 Benzinga does not provide investment advice. All rights reserved.
Yahoo
07-06-2025
- Business
- Yahoo
Should I Prioritize My 529 Plan or Focus on Other Savings Opportunities for My 16-Year-Old's Education?
There are benefits to saving for retirement in a 529 plan. Because these plans impose penalties for non-educational withdrawals, you may want to limit how much money you put into one. Brokerage and savings accounts could be a viable alternative to a 529. The $23,760 Social Security bonus most retirees completely overlook › As always, The Motley Fool cannot and does not provide personalized investing or financial advice. This information is for informational and educational purposes only and is not a substitute for professional financial advice. Always seek the guidance of a qualified financial advisor for any questions regarding your personal financial situation. If you'd like to submit your question for feedback, you can do so here. If the idea of paying for college is just about as overwhelming as boarding a plane to skydive out of, you're not alone. U.S. News & World Report puts the average cost of tuition and fees at a whopping $43,505 for private colleges. For out-of-state students at public colleges, that number is considerably lower at $24,513. And for in-state public college, tuition and fees are $11,011 on average based on data from the most recent academic year. But even the "cheapest" of these options is one you might need to save diligently for, especially if you have multiple children. And while you might think that it pays to put all of your college savings into a 529 plan, you may want to explore other options, too. Recently, a Reddit (NYSE: RDDT) poster asked if they should be saving all of their money in a 529 plan for their 16-year-old's education, or if they should be branching out. They already have an impressive $70,000 balance in a 529, but they're not sure what other savings vehicles they should focus on in the next two to three years. What is your target 529 balance?byu/Urbanttrekker inMiddleClassFinance Thankfully, the poster is already saving 25% of their income for retirement. They're putting 5% into the 529 and another 10% into what they call "undefined savings." They're set with their emergency fund and have no debts aside from a low-cost mortgage they're eight years from paying off. There's nothing wrong with the poster continuing to save for college in the next few years. But they may want to look outside of a 529 plan. Although 529 plans offer the benefit of tax-free gains and withdrawals, they can reduce the amount of financial aid students get. These plans generally won't have an impact on merit-based scholarships, and they tend to have less of an impact on aid if the parent owns the account, not the student. But that's something to keep in mind. The other issue is that withdrawing 529 funds for non-qualified education expenses generally results in a 10% penalty on the gains portion of those funds, plus taxes on the gains portion of the withdrawal. Now thanks to the SECURE 2.0 Act, it's possible to roll up to $35,000 of unused 529 plan funds into a Roth IRA without incurring taxes or a penalty. So that is one way to deal with an overage. Another option is to designate the extra funds for a different beneficiary – if one exists. The Reddit poster above only makes mention of one child. So designating a different beneficiary may not be a viable solution. It's great that this Reddit poster wants to continue saving for their child's education even after having done such a great job already. But since they already have a fair amount of money in a 529 plan, they may want to branch out and put their remaining college savings elsewhere. One option to consider is a taxable brokerage account. The money in there won't grow tax-free as is the case with a 529. The benefit, however, is flexibility. The poster's child may not end up needing more money for college than what's already been saved. Rather than deal with the headache of having to figure out a plan for excess funds, putting the money into a brokerage account makes it available for any purpose at any time without restriction. The poster could let their child use that money to buy a car or fund a move to a new city after college. Another option is to look at a high-yield savings account. This isn't a great option when you're dealing with a long investment window. But the poster's child is 16, which means college may be just a couple of years away. If they want a safe, stable home for that money without taking on the risk of stock market fluctuations, a high-yield savings account fits the bill. And thanks to today's interest rates, it's not like a high-yield savings account won't earn any money. Saving for a child's education is a great way to avoid having them graduate with a pile of debt. It could make sense to use a 529 plan for the tax benefits involved, but that's not the only account you should consider – especially if you're nearing the point where your child is headed to college and you want to minimize some of your risk. If you're like most Americans, you're a few years (or more) behind on your retirement savings. But a handful of little-known could help ensure a boost in your retirement income. One easy trick could pay you as much as $23,760 more... each year! Once you learn how to maximize your Social Security benefits, we think you could retire confidently with the peace of mind we're all after. Join Stock Advisor to learn more about these Backman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Should I Prioritize My 529 Plan or Focus on Other Savings Opportunities for My 16-Year-Old's Education? was originally published by The Motley Fool Sign in to access your portfolio
Yahoo
24-05-2025
- Business
- Yahoo
I overfunded my kids' 529 plan — now I'm facing a punishing 10% penalty. Why I'd save less if I could go back
Imagine you're a diligent parent who, haunted by your own student debt, maxes out a 529 college savings plan for your kids every year to afford a pricey private college. Then life veers off script: Your kids picked more affordable in‑state schools, graduated early and even received help from a generous grandparent. Thanks to Jeff Bezos, you can now become a landlord for as little as $100 — and no, you don't have to deal with tenants or fix freezers. Here's how I'm 49 years old and have nothing saved for retirement — what should I do? Don't panic. Here are 5 of the easiest ways you can catch up (and fast) Nervous about the stock market in 2025? Find out how you can access this $1B private real estate fund (with as little as $10) Two decades later, the 529 still bulges — largely from investment gains. Cashing out for non‑education expenses would trigger ordinary income tax plus a 10 % penalty on the earnings portion, according to the IRS. Now, you're asking the same question many savers face: How much is too much to save for your kids' college, and what are your options if you overshoot? Here's what you need to know about 529 plans and what to do with what's left over. A 529 plan is a tax‑advantaged investment account specifically for education costs. Anyone can open one and name a beneficiary (like a child, grandchild or even yourself). There are typically two types of 529 accounts: Savings and investment plan: You save money in a 529 investment account. Growth is tax-free if used for qualifying expenses. This is the most flexible plan, as it can be used for K-12, college and apprenticeships. Prepaid tuition plan: This plan locks in today's tuition rates, usually for in-state, public colleges, and is less flexible. There are several benefits of a 529 plan, including tax breaks and the ability to control investment options. You can also switch the beneficiaries of a 529 investment plan, too. For example, you can change it from yourself to your child, and then your niece or nephew, depending on how you plan to use the funds. However, there are also a few drawbacks. If you pull the money for non-educational expenses, you'll pay income tax plus a 10% penalty on the earnings. There is also some market risk. If the market crashes when your kids head to college, you could end up with less cash than expected. And there's a chance you won't need all the funds. So, what happens if there is money left over? There are a few ways to use it. First, you can save money and pull it out during your own retirement. Your income will be lower, so you'll pay less income taxes. You will still pay the 10% penalty, but remember, that is only on growth. Other options include: A Roth IRA rollover: Under SECURE 2.0, up to $35,000 of a 529 (held at least 15 years) can migrate to the beneficiary's Roth IRA, subject to annual IRA limits and income requirements. Other qualified training: Graduate school, trade programs, student‑loan repayment (up to $10,000 per lifetime) or even qualified international study count, too. Changing the beneficiary: Swap the account to cover college costs for another child in your family — a niece, nephew or even a grandchild down the line. Or, switch it to yourself and get that pottery certificate in Tuscany you've always dreamed of. (Just make sure it's eligible first.) Read more: This is how American car dealers use the '4-square method' to make big profits off you — and how you can ensure you pay a fair price for all your vehicle costs Consider using these strategies to hit the sweet spot — big enough to cover most costs, but small enough to sidestep penalties and wasted growth. Estimate the cost of four years at your state university, then add a small cushion (maybe 20 %). Adjust annually as tuition data updates. If your child ends up choosing a pricier school, you can cash‑flow the gap, apply for aid or take out student loans. This will prevent over-saving and give you more flexibility to save more for retirement or finance other goals. Ask grandparents and other family members if they plan to pay directly or fund their own 529 plan. It can be tough to have these conversations, and people may not know yet how much — or if — they can contribute. However, starting the discussion early can help you balance savings. Front‑loading (saving more when your children are very young) can turbocharge growth and reduce the risk of overfunding if plans change. Revisit the goal each year and decide how much is right to contribute. By high school, for example, you might realize your child is likely to attend a trade school, so you may readjust your contributions. Consider reshuffling the portfolio during each year of high school to mitigate risk. That locks in gains and shields you from a late‑cycle crash. Much like moving to reduce risk as you get closer to retirement, this helps protect your funds before you need them. Even with careful planning, you could end up oversaving. Make sure you have a plan now for where the funds will go. Leftover funds can be rolled to another relative, converted to an IRA for your kids, pay for your own training or used to bolster your retirement savings. Aim for moderation when funding a 529; save enough to cover a solid in‑state education, keep other savings on track and stay flexible. That way, you won't end up with a tax headache when those Ivy League dreams turn into a state school reality. Want an extra $1,300,000 when you retire? Dave Ramsey says this 7-step plan 'works every single time' to kill debt, get rich in America — and that 'anyone' can do it Rich, young Americans are ditching the stormy stock market — here are the alternative assets they're banking on instead Robert Kiyosaki warns of a 'Greater Depression' coming to the US — with millions of Americans going poor. But he says these 2 'easy-money' assets will bring in 'great wealth'. How to get in now Here are 5 'must have' items that Americans (almost) always overpay for — and very quickly regret. How many are hurting you? This article provides information only and should not be construed as advice. It is provided without warranty of any kind. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
23-05-2025
- Business
- Yahoo
I overfunded my kids' 529 plan — now I'm facing a punishing 10% penalty. Why I'd save less if I could go back
Imagine you're a diligent parent who, haunted by your own student debt, maxes out a 529 college savings plan for your kids every year to afford a pricey private college. Then life veers off script: Your kids picked more affordable in‑state schools, graduated early and even received help from a generous grandparent. Thanks to Jeff Bezos, you can now become a landlord for as little as $100 — and no, you don't have to deal with tenants or fix freezers. Here's how I'm 49 years old and have nothing saved for retirement — what should I do? Don't panic. Here are 5 of the easiest ways you can catch up (and fast) Nervous about the stock market in 2025? Find out how you can access this $1B private real estate fund (with as little as $10) Two decades later, the 529 still bulges — largely from investment gains. Cashing out for non‑education expenses would trigger ordinary income tax plus a 10 % penalty on the earnings portion, according to the IRS. Now, you're asking the same question many savers face: How much is too much to save for your kids' college, and what are your options if you overshoot? Here's what you need to know about 529 plans and what to do with what's left over. A 529 plan is a tax‑advantaged investment account specifically for education costs. Anyone can open one and name a beneficiary (like a child, grandchild or even yourself). There are typically two types of 529 accounts: Savings and investment plan: You save money in a 529 investment account. Growth is tax-free if used for qualifying expenses. This is the most flexible plan, as it can be used for K-12, college and apprenticeships. Prepaid tuition plan: This plan locks in today's tuition rates, usually for in-state, public colleges, and is less flexible. There are several benefits of a 529 plan, including tax breaks and the ability to control investment options. You can also switch the beneficiaries of a 529 investment plan, too. For example, you can change it from yourself to your child, and then your niece or nephew, depending on how you plan to use the funds. However, there are also a few drawbacks. If you pull the money for non-educational expenses, you'll pay income tax plus a 10% penalty on the earnings. There is also some market risk. If the market crashes when your kids head to college, you could end up with less cash than expected. And there's a chance you won't need all the funds. So, what happens if there is money left over? There are a few ways to use it. First, you can save money and pull it out during your own retirement. Your income will be lower, so you'll pay less income taxes. You will still pay the 10% penalty, but remember, that is only on growth. Other options include: A Roth IRA rollover: Under SECURE 2.0, up to $35,000 of a 529 (held at least 15 years) can migrate to the beneficiary's Roth IRA, subject to annual IRA limits and income requirements. Other qualified training: Graduate school, trade programs, student‑loan repayment (up to $10,000 per lifetime) or even qualified international study count, too. Changing the beneficiary: Swap the account to cover college costs for another child in your family — a niece, nephew or even a grandchild down the line. Or, switch it to yourself and get that pottery certificate in Tuscany you've always dreamed of. (Just make sure it's eligible first.) Read more: This is how American car dealers use the '4-square method' to make big profits off you — and how you can ensure you pay a fair price for all your vehicle costs Consider using these strategies to hit the sweet spot — big enough to cover most costs, but small enough to sidestep penalties and wasted growth. Estimate the cost of four years at your state university, then add a small cushion (maybe 20 %). Adjust annually as tuition data updates. If your child ends up choosing a pricier school, you can cash‑flow the gap, apply for aid or take out student loans. This will prevent over-saving and give you more flexibility to save more for retirement or finance other goals. Ask grandparents and other family members if they plan to pay directly or fund their own 529 plan. It can be tough to have these conversations, and people may not know yet how much — or if — they can contribute. However, starting the discussion early can help you balance savings. Front‑loading (saving more when your children are very young) can turbocharge growth and reduce the risk of overfunding if plans change. Revisit the goal each year and decide how much is right to contribute. By high school, for example, you might realize your child is likely to attend a trade school, so you may readjust your contributions. Consider reshuffling the portfolio during each year of high school to mitigate risk. That locks in gains and shields you from a late‑cycle crash. Much like moving to reduce risk as you get closer to retirement, this helps protect your funds before you need them. Even with careful planning, you could end up oversaving. Make sure you have a plan now for where the funds will go. Leftover funds can be rolled to another relative, converted to an IRA for your kids, pay for your own training or used to bolster your retirement savings. Aim for moderation when funding a 529; save enough to cover a solid in‑state education, keep other savings on track and stay flexible. That way, you won't end up with a tax headache when those Ivy League dreams turn into a state school reality. Want an extra $1,300,000 when you retire? Dave Ramsey says this 7-step plan 'works every single time' to kill debt, get rich in America — and that 'anyone' can do it Rich, young Americans are ditching the stormy stock market — here are the alternative assets they're banking on instead Robert Kiyosaki warns of a 'Greater Depression' coming to the US — with millions of Americans going poor. But he says these 2 'easy-money' assets will bring in 'great wealth'. How to get in now Here are 5 'must have' items that Americans (almost) always overpay for — and very quickly regret. How many are hurting you? This article provides information only and should not be construed as advice. It is provided without warranty of any kind. Sign in to access your portfolio
New York Times
16-05-2025
- Business
- New York Times
Want a Gift for Opening a 529 College Savings Account?
If you're considering opening a 529 college savings account for your child, this may be the time to do it: Some state plans offer cash incentives in May. Many students are about to move from one phase of their education to the next, whether it's completing kindergarten or finishing middle school and moving on to high school. 'It's a time when people are thinking about education,' said Mary Morris, the chief executive of Virginia's Commonwealth Savers program and chair of the College Savings Plans Network, a group for 529 plan administrators. That's why 529 plans often promote perks now — to spur contributions. Offers range from modest matching gifts for opening or adding to an account to sweepstakes-style events dangling thousands of dollars in prizes. Recent stock market gyrations may have given some parents pause about investing. But if saving starts when children are young, there's time to ride out market swings. Richard Polimeni, managing director of education savings programs at Merrill and Bank of America, said he opened 529 accounts for his children soon after they were born. 'There's nothing that's even close to a 529 if saving for college is your primary goal,' he said. What is a 529 account? Named for a section of the tax code, state-sponsored 529 accounts are for saving or investing money for college costs and other educational expenses. Money in the accounts grows tax free. In addition, some states offer tax breaks for 529 contributions, though there is no federal tax deduction. Funds can be withdrawn tax free to pay for eligible spending on tuition, housing, food, books and supplies. (Withdrawals for nonqualifying costs are subject to income tax, plus a penalty.) At the end of 2024, there were about 17 million accounts holding $525 billion, or an average of nearly $31,000 each. What sort of cash incentives are we talking about? Pennsylvania's 529 College and Career Savings Program is offering savers the chance to win $5,529 for their college accounts if they deposit at least $10 during May. Six prizes will be awarded. West Virginia is holding a drawing to choose the winner of a $15,000 prize that will be deposited into a Smart529 account. Entries must be submitted before midnight on Friday. Alabama's CollegeCounts program is offering the chance to win a $529 contribution to accounts for babies born between May 29, 2024, and May 29 this year. And Utah's my529 plan is offering up to $40 in matching contributions for participants who open an account this month for a beneficiary new to the program. Contestants who submit a photo by May 29 of the person they're saving for will be entered into a drawing to win one of five contributions of $529 into an Indiana529 account. Virginia's offer, Ms. Morris said, will deposit $25 into Invest529 accounts that are opened on May 29. (An expanded list of state offers is available on the savings network's website.) The most effective way to save for college is generally to start early and make regular contributions while your child goes through school, said Liz Miller, a certified financial planner in Summit, N.J., and chair of the Certified Financial Planner Board of Standards, which sets standards for the financial planning profession. But if a state incentive or bonus can help savers get started, she said, that's a plus. Some states tie promotions to regular contributions. California's ScholarShare 529 program, for instance, is offering a $50 bonus to savers who open a new account between next Tuesday and May 31 — if they commit to making a monthly contribution of at least $50 for six months. How much does college cost these days? The average cost of attending college — including tuition, fees, housing and meals — ranges from $14,440 a year at a two-year community college to about $25,000 at a four-year, in-state university to almost $59,000 at a private, four-year college. Books, supplies and personal expenses are extra. (Those totals reflect 'sticker' prices published by colleges for the 2024-25 school year, but many students pay far less, after financial aid.) Why should I save in a 529 plan? With college costs being steep, the accounts can help families save for higher education and reduce borrowing, Ms. Morris said. The federal student loan system has recently been in turmoil, in part because the five-year pause on payments and collections, a legacy of the Covid-19 pandemic, ended. About a quarter of student borrowers who are currently required to make payments are considered delinquent, surpassing levels in early 2020 before the pandemic, the Federal Reserve Bank of New York reported on Tuesday. Borrowers who don't get back on track face forced collections and damaged credit scores, which can set them back financially. To avoid over-borrowing, students should aim to borrow no more than their anticipated annual salary upon graduation, said Mark Kantrowitz, a financial-aid expert. Ms. Morris suggested that families consider paying for college using this formula: Plan on paying for one-third out of current income earned by the family and the student; one-third through saving and investing, including a 529 plan; and a third through borrowing. Ms. Miller said she recommended that families consider a 'direct sold' 529 plan, which allows savers to enroll and select from a menu of investment options on their own. Some states also offer 'adviser sold' plans, in which a financial professional manages your account, but they tend to have higher fees. Can 529 accounts be used for more than paying for college? In recent years, tax law updates have made the accounts more flexible. They can also be used to pay tuition for kindergarten through high school, as well as for apprenticeships. In addition, up to $10,000 from a 529 can be used to repay the beneficiary's student loans. And under the federal law known as SECURE 2.0, up to $35,000 in a 529 account can be rolled over into a Roth individual retirement account for the beneficiary of the 529 account, if certain conditions are met. The Roth option helped some parents overcome concerns about saving in the account if their child decides not to attend college. Do I have to be a resident to qualify for a state's 529 incentives? You can open a 529 account in any state that offers one, even if you don't live there (although opening one in your own state may offer state-level tax breaks that can enhance your savings, Ms. Miller noted). Rules on promotions vary, however, so check the offer's details. California's offer is available to residents of all 50 states, and Ms. Morris said Virginia's bonus for May 29 contributions is open to anyone. Pennsylvania's offer is restricted to account owners who are residents of the state. They may, however, use the account to save for a beneficiary who lives in another state, such as a grandchild. Under a recently adopted change in financial aid rules, grandparents can save for a grandchild's college education without affecting the child's eligibility for financial aid.
