| Should I retire early or help my daughter with college? |
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James0801
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| Should I retire early or help my daughter with college? |
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I'm 48 and work as an engineer. I've worked very hard all my life and have a good salary (100k+) to show for it. My goal is to retire in a year and a half, when I turn 50. I will be financially ready to retire by then: I have adequate savings and the house is paid off (and my wife has decided to continue working for a few years after I retire as she enjoys her job as a software developer).
My daughter is beginning a master's program this fall, and she has calculated that her total student loan debt will be approximately 70k by the time she graduates in two years. She has asked me to help her with some of her school expenses, but this would mean I would have to put off my retirement by one year and retire at 51. Is it worth it?
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Sat Aug 18, 2012 6:22 pm |
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oldguy
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quote:
Is it worth it?
How many kids do you have? (If you gift her $70k you will need to do the same for the others).
But if she's an only child, it would be a great boost for her. At $100k/yr gross you could devote the entire net salary for one year (~$70K) and give her a running start on her career. What's her major? A marketable degree? If she has a STEM MS she can probably go right into a $70k job. Or, if she is a social worker, she could look for severla months to find a $30k job - the extremes are wide.
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Sat Aug 18, 2012 6:48 pm |
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James0801
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She's my only child, so I thankfully don't have to worry about sending more than one child to college. Her degree is in education, specifically teaching English as a second language, and she's told me that her plan is to teach at a university, so she will probably be making approximately 40k to start and will work towards 50k with a few years of experience.
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Sat Aug 18, 2012 6:58 pm |
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oldguy
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quote:
so she will probably be making approximately 40k to start and will work towards 50k with a few years of experience.
She'll really appreciate some help, $40k gross gives her about $28k after Fed Tax and Payroll Taxes, that could be tough in a university town, she'll probably spend $12,000/yr for rent/util, $10,000 for car payments, gasoline, insurance, $5000 for food, Add in some fun, some new clothes, an iPad, etc, and most of the $28k is gone. Servicing a $70,000 debt could be a hardship for her.
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Sat Aug 18, 2012 8:26 pm |
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littleroc02us
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Maybe try this method, whatever she pays off each year give her double that amount as a motivation to pay it off faster. So if she owes 70k in student loans and she pays $4,500 a year towards the loan out of her net income of 28k and you match double that the loan is easily paid off in 5 years. To me it's show responsibility for her to contribute money from her income to help pay off the loans and is in return show's good parenting IMO. Plus your really helping her out, which she should feel gratitude towards you.
Risk comes from not knowing what you're doing. (Warren Buffet)
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Tue Aug 21, 2012 8:38 pm |
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clydewolf
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| Re: Should I retire early or help my daughter with college? |
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quote:
Originally posted by James0801
I'm 48 and work as an engineer. I've worked very hard all my life and have a good salary (100k+) to show for it. My goal is to retire in a year and a half, when I turn 50. I will be financially ready to retire by then: I have adequate savings and the house is paid off (and my wife has decided to continue working for a few years after I retire as she enjoys her job as a software developer).
My daughter is beginning a master's program this fall, and she has calculated that her total student loan debt will be approximately 70k by the time she graduates in two years. She has asked me to help her with some of her school expenses, but this would mean I would have to put off my retirement by one year and retire at 51. Is it worth it?
James0801,
Retiring at 50 has some negative effects on your retirement income. You will not be able to contribute to your 401k plan (I know I am assuming you have a 401k plan available), and your SS benefit will be reduced.
The obvious thing about the 401k contributions, with no compensation from an employer, you just can not contribute.
Let's look at your SS benefit calculation. The SS benefit is derived from your highest 35 years of income. If there is no income in a year in that 35 year span, a zero dollars is used. Right now you probably have your highest earning years ahead of you, and you will be giving that up. Between you and your spouse there are many ways to receive your SS benefit and when to begin is part of that puzzle. A general statement is, the more we earn during our working years, the greater the SS benefit will be. A good source of information about SS benefits is a book by Jim Blankenship, titled "A Social Security Owner's Manual" Check your local library for the book. If the library does not have the book, ask them to get it for you.
Mr. Blankenship is a moderator on these boards.
As long as you or your wife are working, you can make an annual contribution to your IRA. But after you retire, and your spouse retires, that IRA contribution is gone too.
I agree with Littler02us, it would be good to help your daughter with her MS expenses After successful graduation.
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Tue Aug 21, 2012 10:34 pm |
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Offshore-Wealth.com
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| Helping Children WIth College |
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Interesting,
I was all for helping my three children with college, but loans are loans, so it depends on the situation. Having one child is far easier decision than three or more to put through college, but here is the bottom line.
My college graduates, two with masters have yet to find a job, and since I also retired at 50 selling my business, things did not work out as planned. My home wasn't fully paid off, but with loss of 40% of value, I have little equity left, and with a dpression on the horizon, I was forced to start a new business to try and replace what I invested into college educations.
Simply put, if you daughter is already in debt of $70K, I sure hope she will be emplyed when she gets her masters. Economic outlook is dismal, so if I was you, I would not be looking at retirement for several years not knowing how big a disaster the economy wiill become in a few months.
Good luck,
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Wed Aug 22, 2012 11:48 pm |
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littleroc02us
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| Re: Helping Children WIth College |
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quote:
Originally posted by Offshore-Wealth.com
Simply put, if you daughter is already in debt of $70K, I sure hope she will be emplyed when she gets her masters. Economic outlook is dismal, so if I was you, I would not be looking at retirement for several years not knowing how big a disaster the economy wiill become in a few months.
Good luck,
IMO, whether you have a masters or not, the job market really isn't that bad. We just hired 5 new techs, 6 of our employees in the past year all left and went to another company. In fact this has been a great year for me personally, I got a 3% raise in July and just yesterday I was told by my boss that based on my performance he was giving me another 6%. So personally I don't agree that there aren't jobs out there. I only have a BA. As for the economic outlook, never in history have interest rates been this low to refinance our buy a house. The market has nearly 100% come back to where it was pre-recession. I guess I have to stop being so optimistic. 
Risk comes from not knowing what you're doing. (Warren Buffet)
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Thu Aug 23, 2012 1:31 pm |
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Offshore-Wealth.com
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| Re: Helping Children WIth College |
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quote:
Originally posted by littleroc02us
quote:
Originally posted by Offshore-Wealth.com
Simply put, if you daughter is already in debt of $70K, I sure hope she will be emplyed when she gets her masters. Economic outlook is dismal, so if I was you, I would not be looking at retirement for several years not knowing how big a disaster the economy wiill become in a few months.
Good luck,
IMO, whether you have a masters or not, the job market really isn't that bad. We just hired 5 new techs, 6 of our employees in the past year all left and went to another company. In fact this has been a great year for me personally, I got a 3% raise in July and just yesterday I was told by my boss that based on my performance he was giving me another 6%. So personally I don't agree that there aren't jobs out there. I only have a BA. As for the economic outlook, never in history have interest rates been this low to refinance our buy a house. The market has nearly 100% come back to where it was pre-recession. I guess I have to stop being so optimistic.
Glad to hear you have a job, and got a raise, congratulations, but with 15.1% unemployed and under employed, that adds up to very few jobs overall. Yes, Montana is an exception, but overall, I hear everyone is struggling to find a job, just look at the unemployment stats on how long people are out of work before finding another job once on unemployment benefits, it is several months longer than it was last year, not a good sign.
Success to all,
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Tue Aug 28, 2012 1:22 am |
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Wino
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quote:
Originally posted by Offshore-Wealth
but with 15.1% unemployed and under employed, that adds up to very few jobs overall.
I have been trying to hire non-stop since 2010. The problem is there are not enough qualified people. It is NOT a pay issue. We pay well, let me assure you, and we have a very competitive package overall - training, reimbursement for most career-enhancing moves... nearly everything. Our work is hard - it is in the oil patch - but our pay is well-above an office job.
I think that giving people over a year of unemployment money was a mistake. Now, they're used to not working, have let their skills deteriorate, and are happy to sit home collecting their government cheese.
Frankly, I'm discouraged by what I'm being faced with in trying to hire folks.
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Tue Aug 28, 2012 3:38 am |
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littleroc02us
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| Re: Helping Children WIth College |
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quote:
Glad to hear you have a job, and got a raise, congratulations, but with 15.1% unemployed and under employed, that adds up to very few jobs overall. Yes, Montana is an exception, but overall, I hear everyone is struggling to find a job, just look at the unemployment stats on how long people are out of work before finding another job once on unemployment benefits, it is several months longer than it was last year, not a good sign.
Success to all,
That means 85% of the population has a job, plus according to national statistics that number is only 8.2% which means 92% have jobs. I personally don't know anyone of my friends who got laid off or switched jobs haven't been able to find work. I work in a hospital in the IT section and I'm constantly seeing doctors, nurses, etc getting hired. All it takes is one job.
Risk comes from not knowing what you're doing. (Warren Buffet)
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Tue Aug 28, 2012 4:05 pm |
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Offshore-Wealth.com
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| Re: Helping Children WIth College |
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quote:
Originally posted by littleroc02us
quote:
Glad to hear you have a job, and got a raise, congratulations, but with 15.1% unemployed and under employed, that adds up to very few jobs overall. Yes, Montana is an exception, but overall, I hear everyone is struggling to find a job, just look at the unemployment stats on how long people are out of work before finding another job once on unemployment benefits, it is several months longer than it was last year, not a good sign.
Success to all,
That means 85% of the population has a job, plus according to national statistics that number is only 8.2% which means 92% have jobs. I personally don't know anyone of my friends who got laid off or switched jobs haven't been able to find work. I work in a hospital in the IT section and I'm constantly seeing doctors, nurses, etc getting hired. All it takes is one job.
Sorry, but the current 8.3% fake number being reported is not based on all the population, but only the ones looking for work. If you choose to believe that gov. figure, fine, but there are millions more who have gave up and stopped looking who are not counted, so believe any numbers you want, the fact remains the unemployment rate is going up, not down. If all you friends are in the healthcare field, this is about the only market that is growing, but one market does not change the fact 23M plus workers are jobless.
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Thu Aug 30, 2012 1:33 am |
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Wino
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| Re: Helping Children WIth College |
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quote:
Originally posted by Offshore-Wealth.com
If all you friends are in the healthcare field, this is about the only market that is growing, but one market does not change the fact 23M plus workers are jobless.
The oil patch is hiring, and has been for years. We need people from labor up through PhD's for our work. We need mechanics, crane operators, logistics, designers, welders, doctors, nurses, helicopter pilots, electricians, programmers, cooks, cleaners...
Looks to me like folks just don't want to move to where the jobs are, won't travel 50% of the time to be on site, and won't work hard for their money.
And they're "unemployed" so entitled to part of what I'm earning here where I moved, so I can travel 50% of the time just to work hard?
I'm almost to the "let them starve if they won't work" point in my life.
There are thousands of unfilled jobs in the energy industry. People are too lazy, or too stubborn to go to where the work is. Besides, it's easier to blame the government, banks, lawyers, and the bogeyman than it is to actually work for money.
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Thu Aug 30, 2012 2:01 am |
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littleroc02us
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| Re: Helping Children WIth College |
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quote:
Sorry, but the current 8.3% fake number being reported is not based on all the population, but only the ones looking for work. If you choose to believe that gov. figure, fine, but there are millions more who have gave up and stopped looking who are not counted, so believe any numbers you want, the fact remains the unemployment rate is going up, not down. If all you friends are in the healthcare field, this is about the only market that is growing, but one market does not change the fact 23M plus workers are jobless.
Sorry, I know that a small population in America don't have jobs, but there are plenty of areas in the country that are thriving and hiring if your willing to move where the work is. For example Eden Prarie, Eagan, Woodbury, Maple Grove and Chaska Minnesota all have unemployment figures under 4%. Plus Bismark North Dakota has unemployment under 3%.
Risk comes from not knowing what you're doing. (Warren Buffet)
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Thu Aug 30, 2012 1:24 pm |
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