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Save For Retirement or Your Kids’ College

Student loan statistics never cease to disturb. Just in the United States, there are 44 million borrowers with $1.3 trillion in outstanding debt. With that kind of debt burden on new graduates, it's no wonder that many parents want to try and find a way to save for both their children's college expenses and retirement. It may not be possible for every parent to do that and even those who manage should not expect to save all the money their children need, but they can certainly help reduce the amount their children need to borrow by learning to balance their savings. Start by Maxing Out Your 401(k)

Borrowing from a 401(k) to fund college costs is a plan that can quickly backfire. With early withdrawal penalties and taxes, it's an expensive option that should probably be avoided. But a saver can make sure to max out their employer matching contribution to increase the amount that's saved toward retiring and reduce their personal savings burden. Check Out Your State's 529 Plan Options

Planning for college is hard when tuition costs keep rising but in some states, a 529 plan can help by allowing you to prepay tuition costs, locking in today's prices. However, not every state sets up their 529 plans that way. In some states, the plan acts as a normal savings account. Get Help with Financial Aid

Taking on the entire burden of school costs without looking into financial aid is a huge mistake, especially since about 66 percent of full-time students in the 2014-2015 school year qualified for some financial aid. Have your child work with the school's financial aid counselors to determine which programs, grants and scholarships they might qualify for. Automate Savings Deposits

Planning to save money and really saving it are two different things. One way to ensure you actually save for both your retirement and your kids' tuition is by automating your savings deposits. In addition to automating your 401(k) through work, you can automate transfers from your checking account to your kids' tuition funds and your IRAs every week or month. There are also some bank programs and apps that can allow you to regularly save $1 with every debit card purchase or save the change difference between your sales totals and the next rounded up dollar. Open an IRA

Every year, you can deposit a good chunk into an individual (non-employer) retirement account called an IRA. You can choose between a tax-deferred Traditional IRA or a tax-free Roth IRA. If you're in a high tax-bracket now, the Traditional IRA can help you reduce your tax burden, which may leave you with more cash to save toward your dual goals. Choosing a Roth means you can take tax-free distributions later on which reduces the amount you need to have saved. Even if you can't fully fund your kids' tuition costs, the savings you amass can reduce the number of loans they need, putting both you and your child in a much more secure and comfortable financial position during your future golden years.


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KEYSTONE FINANCIAL PLANNING

2405 Anderson Highway, Suite A | Powhatan, VA 23139

julie.manning@keystoneplanner.com            (804-376-7544

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Financial Planning and Advisory Services are offered through Prosperity Capital Advisors ("PCA") an SEC registered investment adviser with its principal place of business in the State of Ohio. PCA and its representatives are in compliance with the current registration requirements imposed upon registered investment advisers by those states in which PCA maintains clients. PCA may only transact business in those states in which it is registered, or qualifies for an exemption or exclusion from registration requirements. This brochure is limited to the dissemination of general information pertaining to its investment advisory/management services. Any subsequent, direct communication by PCA with a prospective client shall be conducted by a representative that is either registered or qualifies for an exemption or exclusion from registration in the state where the prospective client resides. Keystone Financial Planning and PCA are separate, non-affiliated entities. PCA does not provide tax or legal advice. Insurance and Tax Services offered through Keystone Financial Planning are not affiliated with PCA.  For information pertaining to the registration status of PCA, please contact the firm or refer to the Investment Adviser Public Disclosure web site www.adviserinfo.sec.gov. For additional information about PCA, including fees and services, send for our disclosure statement as set forth on Form ADV from PCA using the contact information herein. Please read the disclosure statement carefully before you invest or send money. The Retirement Income Certified Professional (RICP®) certification is a professional designation provided by The American College of Financial Services, Bryn Mawr, PA.  To receive the designation, the individual must complete a minimum of three college-level courses which cover information such as retirement income planning, retirement portfolio management techniques and mitigation of plan risks to the proper uses of annuities, employer sponsored benefits, and determining the best Social Security claiming age.  In addition, the individual must pass an examination, have three years of financial services experience and adhere to the American College’s Code of Ethics. The American College can disallow use of the RICP® if advisors do not adhere to the program’s ethical standards, continuing education, and other requirements.