“OP - if you don’t have any savings other than your 401K then you can’t afford full pay with 200K income living in NJ. Sorry to be blunt. Your net income would be around 120K after taxes, 401K contribution and insurance. I don’t think you could be living on 60K net/yr right now.”
Please consider that there are parents applying to colleges right now who live on way less than $60k gross, let alone net, including in HCOL areas. $5K/month after retirement and college should be more than sufficient to live anywhere - especially with no kids left at home. If parents making $200K/year don’t want to pay full price for a kids’ college, that’s a perfectly fair choice to make, but I literally cannot imagine a situation in which it could be described as unaffordable - barring unusually high medical bills.
“$5k/month after retirement and college should be more than sufficient to live anywhere” Southern California mom here having a good chuckle over that one… I can’t imagine being able to live on 5k a month in my area, not unless I downsized to a starter condo or something? My four kids probably wouldn’t all want to share one room. Starting rent on a one bedroom apartment in my area is $1800 a month.
As far as the concept of “my parents didn’t help me, I don’t owe my kids anything” camp, I find it really hard to relate to this. I put myself through college in the early 90’s, with a job, student loans, and Pell grants I barely made it work. Cost of attendance is more now, student loans are capped… cost of attendance at a cal state is over 20k a year, with loans capped at 5500 for freshmen. Unless a student can commute from home it would be very difficult to put oneself through college anymore if parents make ample income but refuse to pay.
Another Southern California mom here. $5000 per month after taxes is much more then many people in Southern California get. Unless someone has large loan payments or lives in Beverly Hills it is very doable.
Not in Beverly Hills, way out in the burbs… my mortgage, property taxes, and insurance are $3700 a month. Add in feeding 6 people, insurance on 4 cars, one used car payment, utilities, gasoline for 4 cars, clothes, incidentals, private school for little two (optional obviously), two in college… 5k a month wouldn’t get our family far.
And when I said one couldn’t live on 5K at high cost area, I am talking about OP’s current situation, which is a family with 2-3 kids. You need multiple cars, insurance, school supplies, clothing for kids, real estate taxes (NJ)…I am an empty nester now, I can live on a lot less than when my kids were in high school.
I know around NYC area, it would be a struggle for a family of 4 to find a rental for under 3K at a good school district. I think we all can do the math to add up cost of food, insurance, utilities, transportation, etc.
Ah, the old “good school district” caveat. Most people live in average to lower school districts. The money to pay for the “good one” is a privilege, not a necessity. (Brought up my kids in an “ungood” one. It worked out pretty well.)
Since we did that impossible thing (full pay, income less than 200K, New Jersey), I know it is in fact possible.
Ah the old it worked out for me so it would work out for everyone else caveat. If only all people and their life circumstances were the same such that all decisions would lead to the same results.
So do the colleges, in their FA formulas, factor in the high COL? Ie, 200K may be a lot to live on in many places in the midwest, but is not a lot in NYC suburbs.
The FAFSA does not account for COL. The Profile can, but I don’t know at what level of detail it adjusts, since their formula is a black box.
It’s really hard to estimate how much money we will need as empty-nesters. Yes, don’t need a good school district, no teen drivers needing auto-insurance. But, at what age will our kids be truly independent? What will our housing costs really be? Will we live near our kids or stay where we are? What about medical care?
Living in a good school district does tend to keep property values up, but I know many empty nesters who move from Scarsdale or other high wealth to anywhere else the second their last kid starts college. We made a different choice - we live in a good enough school district where the high achieving kids do very well and there seems to be a good deal less stress for them. They got into great colleges and you can get more house and a lower tax rate. We pay $16,000 or so a year on housing costs (mortgage, insurance RE taxes). NYC suburbs. 5 BR house, so we could easily downsize.
I do agree medical cost are a big question mark, especially if ACA is being dismantled.
I believe hipmama was saying that after paying for college and putting money in a 401K, $5K per month should be plenty to live on, “especially with no kids left at home” but not exclusively as an empty nester.
As far as I know, there is no to very little consideration of COL in financial aid decisions. There is no consideration as to whether a family with two parents in the home is earning that amount with one bread winner or two. If both parents work full time, child care and other costs are typically higher (or were for a long time) then if there is a stay at home parent to provide child care.
The decision to be full pay is not easy for parents who kind of, sort of, have the money and if the world continues to be kind, may be able to pay and retire. But as many learned in 2007-2008, things don’t always work out as you plan.
The other issue is whether the school is really “worth” the extra dollars. Easy to decide when it is Harvard vs second tier state U, but as many, many, many threads have discussed, the decision is more complex when comparing a decent but very expensive private U (say in a very desirable location) vs a more affordable, less desirably located school when the student profile and quality of the education are not that different.
@saillakeerie --Nowhere do I make that claim. I clearly stated that it’s not impossible to be from NJ and live on that much money and be full pay. My description of my situation doesn’t say that everybody can do this; it says that it’s not impossible.
Our family lives in Downstate NY on less than $60k/year. I think the reason people who earn more think living on less money isn’t doable in higher COL areas is because they can’t seem to get their heads around the “living on less” involves more than just money – it’s less everything. You can’t have the same quality of lifestyle – size or quality of home, school district, vehicles, insurance, food, clothing, etc. on an income of ~$60k or less as you have on your current income. It doesn’t mean you can’t live on less than $60k, you just have to make adjustments to your lifestyle.
I find this conversation fascinating. A comment upthread stood out to me. If your family is full pay at a highly ranked school for your eldest, do you plan to send all your kids to similarly ranked schools? What happens if you have several kids a couple years apart? Are you planning to spend similar amounts on each (even if that means the younger ones have to choose lower ranked schools) or are you planning to let them attend similarly ranked schools (even if it costs you a lot more money by the time the youngest enroll)? I think that would be a difficult position to be in.
But Garland for a kid that graduated in 2000, full pay was much less than it is now. For example, at NYU tuition then was $23,500! Now tuition and fees are $49,200. That is a huge difference. Would you have been able to pay that amount? Plus, you only had $300K in retirement savings but I am assuming you were quite young at that point. I would not be comfortable paying close to $70K per year if that is all the retirement money I had in my 50s.
Austin: Downstate as inner NYC bedroom communities or farther out? Of course it is possible, but many people made a decision about where to live when the cost of elite private colleges was more in the $30K per year range, not approaching $70k per year and have the money for something in between.
There is also something to be said for having a decent (not extravagant) life for the first 18 years of a kid’s life with occasional vacations and the ability to pay for ECs, rather then do nothing besides save for college for 4 half-years of their lives - particularly if they are not superstar students. A lot to be learned from experiences while one is young.
There is no right answer. The kid, the parental savings, the desired major, and the differences in quality of affordable vs stretch schools vary for every family and even among kids in the same family.
Mathmom was smart! We did the exact opposite: we bought a house in a town with a great school system, at a high price, pay extortionate property taxes, discovered that the great school system wasn’t so great for our kids, and paid very high private school tuition. It is true that this area holds property values pretty well.
The best laid schemes o’ mice an’ men / Gang aft a-gley.