When saving for kids and college, there are plenty of ideas on the best plan. Depending on which financial advisor you talk to, you might get a few different answers, which makes it a challenge to know exactly how much to put away. 

In the case of one Redditor in r/fatFIRE, his post tells us he’s put away almost $1 million between two children for their education. Unsurprisingly, he’s asking about the best way to save for his children’s education while glancing right over the reality that he already has too much put-away. 

What I like about this post is that it’s okay to admit you don’t know what you don’t know. I can also appreciate this father’s overzealousness in ensuring the kids have everything they need for school. 

The Scenario 

In this Redditor’s case, you have a scenario where a 47-year-old male, recently widowed, has two children. The oldest child is in 10th grade, while the youngest is in 7th grade, so one child is old enough to start thinking about college in the not-so-distant future. 

When it comes to finances, you have a total net worth of $9.7 million, almost all of which was accrued when the family had two incomes. Now that he is a sole income provider, the dad slash Redditor is wondering about saving for college and when he can retire. 

To help make his way toward retirement, you have a home valued at $2.1 million with $953,000 left on the mortgage. In addition, you have $4.6 million in investments, a retirement account with $2.9 million, an HHI with $450,000, and a 529 account for two children worth $1 million. 

After taxes, medical, retirement, and 529 contributions, the net take-home salary is around $260,000. 

The Recommendation 

When it comes to the Redditor’s primary question about the best way to save for his children’s education, he’s already done it. He should immediately stop all 529 contributions. At this point, he likely has enough for his children and their potential children. On the plus side, he’s on board with this money being used for multiple generations, so the money isn’t “wasted” per se. 

However, knowing that using a 529 isn’t as easy as it sounds, as it doesn’t cover all expenses, my recommendation, as someone who isn’t a financial advisor, is to cease all donations to these accounts. The children are set. Even at the top end of private college education costs, there is more than enough money to handle everything. 

As far as retiring, the Redditor assumes 4% annual growth with retirement being able to get him to $10 million in his retirement account by the time he turns 75, leaving him with an RMD of around $376,000. 

After taxes, he’s banking on around $253,000, which should be more than enough, considering he’s likely to downsize as time goes on, which would help cut down on some of his costs, specifically the hefty mortgage, property taxes, etc. 

The Takeaway

Ultimately, you have to commend the father for wanting to ensure his children are all set for school. They shouldn’t have to worry about loans, which is a fantastic feeling, even if they don’t understand it now. 

Did the father invest too much in a 529 account for both children? The answer is arguably yes, and many commenters on this Reddit post agree with this conclusion. However, things get interesting because the dad already has enough to retire and can spend all his days on Reddit. 

Getting to $10 million might be a goal, but it’s an unnecessary one. Instead, he might want to consider taking a sabbatical from work, traveling to Europe, and recharging as best as possible. He will be an empty nester before he knows it, and even if he doesn’t remarry, he will have more than enough money to enjoy life on his own. 

 

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