Here is thought and you might get your D20 to buy into this.
The cash outlay you are looking out above the 529 is $175-200K. If she were to go to a cheaper school that cut the outlay in half. You could take $100K and invest it for your D20 with the sole idea that it was for retirement. So investing $100K at age 18 and making 7% annually on that money would compound to around $2.4 million when she is 65. Right there you just took care of her retirement for her.
You’re definitely not crazy. But the number you need to look at for reassurance is your projected annual spending in retirement. If you’re not relying on savings, but rather the pension, for retirement spending then the marginal cost of a more expensive school isn’t real significant in the big picture. (I think you’d be getting many of the same answers if you had placed your net worth at 2.3 or 2.7 rather than 2.5 million, which doesn’t mean they aren’t valid but just that spending a bit extra on college won’t change the picture much). Whether a specific school is worth the cost for your daughter is a separate question; some are and some aren’t.
Not correct. Time value of money, that $2.4 million in 47 years will not be close to being enough for a comfortable retirement in 2066 especially after taxes plus she won’t have the education she wants which stays with her the rest of her life.
You can afford it, so it’s not “crazy”. It comes down to more of just a personal choice on what to do with your money. I don’t know if I would do it, but I’m not you and my kid is not your kid.
@socaldad2002 I do get that $2.4M in 47 years might not be enough, but boy that would be a huge chunk of retirement taken care of. I sure wish someone would have done that for me back when I was 18. Just setting up an account with $40K would have done me well.
One thing about retirement I will say is that if you retire with a house paid off, car paid off with low miles, and no credit card debit you won’t need a ton of money in retirement. Hopefully one can secure a medicare supplement.
Can’t speak for you, but I would.
If you had 2.2M and the nice pension and no college costs would you feel like you have enough? If so, you have enough. Think of it this way. Is spending that 300k going to change how you live? Are their things in retirement you won’t be able to do? Have you set aside money for long term care (or purchased a policy)? Biggest expense in retirement is typically healthcare.
If you got it all covered and were just going to give it to her anyway as an inheritance, maybe this is how she would prefer it. t’s not really an issue of should you (or should you not). If money were a non issue, which school would you prefer se attends? Not about better as that’s subjective. Gut feel where will she have a better experience?
Some will say regardless of asset base it’s not worth it (whatever that means). So good for them, they wouldn’t do it. Others will say sure, why not, I can so I will because I / we like it better. Very personal decision. No right or wrong.
What would your DD prefer? Go to her preferred school if accepted or take a less pricey option and the money instead?
We were ready to pay full tuition for any school for our only child. This is a totally personal decision based on your own comfort levels with your savings and investments.
You’re not crazy to be thinking about this.
Please, whatever you decide, get on board emotionally. If you allow your daughter to apply to this pricey school and she’s accepted, don’t keep second guessing - just get on board.
I have a few friends in my circle who did that - they could afford expensive college, kid got in ED, then they spent next 4+ years grousing about the cost! Two sets of parents are now complaining their kid didn’t get the kind of high paying 1st job that should come after graduating from these kinds of schools. I have no idea if their kids hear this, but it seems very demoralizing to me.
If D goes ahead with expensive school applications, be proud and grateful you can afford to give her this education.
Close friends went through this thought process a few years ago. We sort of do this dance too.
Well, at the end of the process, their DD did not get into any of her preferred schools. It came down to State U, or lesser known private schools. The cost of the private schools more than double that of the state U.
Well, she picked one of the private schools. She transferred to one of the most selective schools a year and a half later and has continued to get grad school at a top name schools. She was straight out offered the difference in cost all along the way. That was what she chose. Another person might have chosen differently. She had the pros and cons and costs and benefits drawn out to her fully
FWIW, I don’t think I spent a cent setting up my kids with their jobs or moving. They got some cast off furniture and bought the rest with their own money from Goodwill or Ikea.
You should of course have emergency funds.
It sounds like pension + savings are not a problem for retirement. We made similar choices for our kids. I have no regrets. A loan-free education was a gift I was happy to give them.
OP, you can afford it, so there’s nothing wrong with letting her attend the college of her choice.
If grad school is part of her plans, then you may want to advise her in the direction of a less expensive undergrad. Once she has a graduate degree, the undergrad won’t matter as much on her resume.
Only you can determine that. Nobody here knows your expenses and your goals for retirement.
We’re about in the same boat financially (except 3 kids and proportionally more assets). We are definitely planning to spend the full freight on $70k/yr college. If something other than that happens (that includes 4 year college) they get to keep the 529 balance for future use. So it’s their financial choice to make now. We provided the money but basically gave it them to determine the value of of their college choice. We do not intend to fund graduate school. My three kids (all teens) have very different attitudes about what they want to spend for college.
With your resources, I can’t even imagine not spending whatever is required for your daughter’s education, as long as she is truly serious about it (her education, that is).
I would rather invest in my kid’s education than leaving them money when I die.
Both of my girls are doing well career wise. I do believe where they went school gave them a head start.
A year ago D2 had to make a choice which law school to go to. A top 14 school was 150K cheaper than her current school. I told her that in few years 150K isn’t going to mean that much, at the same time she will have the diploma for life. We saw the difference in recruiting at her school vs the T14 school.
If you don’t require loans to finance your daughter’s college education, then I wouldn’t hesitate to pay for her college tuition. H and I felt that providing our kids with a college education was one of the best gifts we could provide them. I don’t think investing that money or buying “stuff” would have been nearly as fulfilling.
Our situation is similar to yours. We have chosen to invest in her education.
Add my voice to those saying you should pay for it if your D is serious about her education & continues to be serious about it once she starts college.