College Planning Education Module
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One of a suite of individual retirement education modules created for Nationwide Financial, the Retirement Goals Education Module helps a plan participant understand how to save for their children's college. The module system gives retirement specialists the ability to create longer, fully customizable presentations by allowing them to mix, match and combine individual modules in the suite. This enables the sales force a greater flexibility in planning meetings and answering individual plan and participant needs.
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College Planning Education Module
- 2. College Planning 2 This calculation is illustrating the principalof time and compounding. It is based on monthly contributions and an 8% annualized yield. It’s hypothetical and not intended to serve as a projection of the investment results of any specific investment. If fees, taxes and expenseswere reflected, the return would have been less. $132 per month starting at age 2 $54,171 $545 per month starting at age 12 $54,107
- 3. College Planning 3 529 Investments Tuition Credits Coverdell ESAs Other Programs Information provided by Retirement Specialists is for educational purposes only and is not intended as investment advice. Neither the company nor its representatives give legal or tax advice.
- 5. Neither Nationwide® nor any of its representatives give legal or tax advice. Information provided by Retirement Specialists is for educational purposes only and is not intended as investment advice. Nationwide Retirement Solutions, Inc. and Nationwide Life Insurance Company (collectively "Nationwide") have endorsement relationships with the National Association of Counties and the International Association of Firefighters-Financial Corporation. More information about the endorsement relationships may be found online at www.nrsforu.com. Nationwide Retirement Solutions, Inc. and its affiliates (Nationwide) offer a variety of investment options to public sector retirement plans through variable annuity contracts, trust or custodial accounts. Nationwide may receive payments from mutual funds or their affiliates in connection with those investment options. For more detail about the payments Nationwide receives, please visit www.nrsforu.com. Retirement Specialists are registered representatives of Nationwide Investment Services Corporation, member FINRA. In MI only: Nationwide Investment Svcs. Corporation. Nationwide, the Nationwide framemark, and On Your Side are service marks of Nationwide Mutual Insurance Company. ©2013 Nationwide Retirement Solutions Inc. All rights reserved. NRM-7732AO.3 (01/13)
Editor's Notes
- We all know that college doesn’t come cheap. CollegeData.com calculates the average in-state costs of tuition and fees for the 2012-13 school year at a public university was about $8,655. And tuition rose more rapidly this decade than in the previous two. Depending on the type of institution, tuition prices jumped between 4.5 and 8.7 percent just last year. But college isn’t just tuition. A parent needs to consider • room and board – roughly $9,200 a year• books – about $1,200 a year• and the “occasional” pizza OK, you get the picture. The costs of higher education add up quickly. So, how do you plan ahead? Sources: Trends in Tuition and Fees, Enrollment, and State Appropriations for Higher Education by State, The College Board Advocacy and Policy Center, July 2012. What's the Price Tag for a College Education?, CollegeData.com, www.collegedata.com/cs/content/content_payarticle_tmpl.jhtml?articleId=10064, accessed 01/09/2013.
- If you decide to help cover the costs of going to college, it’s smart to start early. Here’s why: Let’s consider the case of a parent who wants to have $50,000 for college education by the time her child reaches 18.To achieve $50,000, assuming an 8% average annual return on investment, this parent would need to invest $132 per month if she starts when child is 2. If the child is currently 12, she’ll need to start investing $545 per month. Big difference, right? That’s the value of time and compounding: Starting early pays off.Please remember that everything about the public employee we just discussed is hypothetical. The calculation assumed monthly contributions and an 8% annualized yield. The results are hypothetical and not intended to serve as a projection of the results of any specific investment. If fees, taxes and expenses were reflected, the return would have been less.
- There are several options when it comes to college savings. The terms vary from state to state, and some states may not offer a given option.Let’s start with 529 plans. These investment plans that allow you to save for education spending while avoiding some taxes. 529 plans typically allow high contribution amounts, made after taxes are taken from your pay. But earnings in the account aren’t taxed unless they are used for something other than education. Anyone can open a 529 plan account for anyone else, and anyone can contribute to the plan. Also, the account can be transferred to another beneficiary, as long as they are a qualifying family member. Coverdell Education Savings Accounts, or ESAs, are another form of education investment with tax benefits. They’re more flexible than most 529s in that you can use them to pay for any education expense — even elementary school. The contribution limits are much lower though: typically around $2,000 per year.Tuition credits can be used toward tuition at a state-run college. You pay in advance at a reduced rate. Other expenses such as room and board are usually not covered. Prepaid tuition plans may be best for investors who are sure that their student will be attending an in-state public school. The credits may be transferred if the child chooses to attend an out-of-state or private school. However, they will usually not cover the full tuition, and the investor often is not compensated for interest the money could have earned.There are a range of investment programs that may be used to save for education. To discuss what program may be best for you, talk to me (or FA if not giving presentation) after this presentation.
- When planning for college, it’s important to look at the big picture. Think about your own needs:• Do you have debt that needs paying off? • Have you planned for your retirement adequately? There are lots of financial aid, loan, grant and scholarship options to finance the cost of college. The same isn’t true for retirement.Then, consider education savings:• Think about college plans. Are the same schools still being considered? (And, more importantly, is tuition still what you expected?)• What types of scholarships are available? How much financial aid do you qualify for? All these questions are important to consider. It’s smart to base your investment decisions on your specific situation.