L yndon Thomas Insurance
INVEST INYOUR GRANDCHILD’S EDUCATION
Are 529 Plans Right for You?
After a fulfilling career of teaching first and second grade, Mom decided it was time to retire when she saw the grandchildren of her first students coming into kindergarten. Dad taught high school English, government, and biology for several years before getting kicked upstairs, where he spent the remainder of his career as principal. Through the years, they both had daily commutes of 35 miles or more and volunteered extensively in their community. So, I was surprised when they observed that they were busier than they had ever been in retirement. The nice thing about that busyness was that they were doing more of what they liked to do, part of which was to travel. Shortly after their retirement, for their 50th wedding anniversary, my brother and I gave them a choice of trips to take. They chose a European church history tour, visiting the Luther, Calvin, and Wesley sites in several countries of Europe. Boy, that really got them going! After that, there was a family history trip to Ireland and cruises to Alaska and through the Panama Canal. They really liked the New England fall color cruise. And all of that’s not including their many driving tours around the United Sates. Mom said in jest, “We’re spending your inheritance!” Maybe she was serious! Medicare does not pay for medical expenses outside of the U.S. Don’t leave the country without international emergency medical coverage. Medicare Advantage plans and Medicare Supplements have reimbursement coverage, but most have limits — some as low as $10,000. Cruises and group travel most likely have foreign emergency medical coverage available for purchase. If such a policy is offered by the organizer of the trip, take it. However, if you are planning travel yourself, why not let Lyndon Thomas Insurance provide you with excellent international medical travel insurance for just a few dollars a day? Add us to your trip preparation checklist. Bon voyage! Are You Prepared for International Travel Medical Expenses?
There are many strategies out there for folks who want to invest in their grandchildren’s education. Different options may be more attractive than others depending on your income bracket and the needs of your family. Traditional strategies, like life insurance policies or paying for your grandchild’s schooling directly, only work if you have the capital. Furthermore, those methods can often negatively affect how much financial aid your grandchild qualifies for. Before you commit yourself to one of these paths, it’s worth exploring a third option: 529 saving plans. 529 plans are income tax-free savings plans specially designed to help you invest in a child’s higher education. In general, these are treated favorably by financial aid assessors, meaning you won’t hurt your grandchild’s chances of receiving government grants. There are two broad types of 529 plans: college savings plans and prepaid tuition plans. SAVINGS PLANS College savings plans use one or more investment portfolios to grow your grandchild’s tuition fund. Each portfolio contains a diversified mix of investments curated by the plan’s money manager. Most plans allow you to select from a menu of portfolio options that best fit your goals and risk tolerance. Many college savings plans start aggressive and then become more conservative as your beneficiary approaches college age. The downside with these sorts of plans is that there will always be risk involved; there’s no guarantee on investment returns. PREPAID TUITION PLANS States and some private institutions have 529 plans available that let you pay for your grandchild’s tuition up front, well before they are ready to head off to college. Some plans guarantee to cover a set amount of future tuition expenses in exchange for a lump sum or payment plan. Other plans allow you to buy “units” or “credits,” which translate to a fixed percentage of an institution’s tuition. Essentially, you pay the cost of tuition today rather than what it will cost by the time your grandchild goes to college. Prepaid plans are far less risky than savings plans, but they aren’t as flexible. They often limit options to state schools or select institutions, though most plans offer some form of reimbursement option if your beneficiary decides to attend another school. College just isn’t as affordable as it used to be. Knowing your options and finding a savings strategy early in your grandchild’s life can help ensure the avenues of higher education stay open for them.
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