As we enter our careers, we’re bombarded with messages about the importance of retirement savings. And it’s true: retirement is a very important event in your life, and you need to be prepared. There’s another expense that may be worth saving for, however: your children’s education.
Assisting in your child’s education expenses is a decision you (and your spouse or partner) should discuss. It’s crucial to decide a strategy before committing to college savings. Once you do commit, you may want to consider a 529 plan.
Many doctors may overlook a 529 plan because they don’t want money tied down for one specific purpose. A 529 plan is similar to an HSA in that, the money you invest is there for education expenses only. Any withdrawals for other purposes will be taxed as income with an extra 10% penalty tacked on.
An important factor to consider in a 529 plan are the tax advantages. Many stats offer tax benefits for contributions to a 529 plan, including deducting contributions from state income tax or matching grants. In addition, the earnings in a 529 plan grow tax-free.
The most important factor to consider in saving for children’s education is not to prioritize those savings over your own goals. Saving for your own retirement or other long-term goals should take precedence; education savings can be considered extra. It would make sense that a doctor who is well-situated financially would be in a better position to assist his or her child with education expenses.
Are you ready to review choices you have for education savings?
Advisory services offered through Larson Financial Group, LLC, a Registered Investment Advisor.
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Larson Financial Group, LLC, Larson Financial Securities, LLC and their representatives do not provide legal or tax advice or services. Please consult the appropriate professional regarding your legal or tax planning needs.