Prepare to Live Well
Although college for the kids and retirement seem a world away, it is necessary to look to the needs of the future. Even families with young children need to start planning and saving for future needs such as college and retirement. Life insurance is also a necessity for families with children. Here are some tips so that you can prepare to live well into the years ahead.
Life insurance could be called family insurance because that is who benefits from this protection. Though it is hard to think about dying unexpectedly, your young children will need stability in the form of financial support even though you are no longer around.
When thinking about an amount to insure you and your spouse for, think about what resources would be needed to maintain your family’s current lifestyle. In addition, expenditures like college for the kids or retirement come into play when figuring out life insurance coverage. Consulting with an insurance agency in San Diego is a great way to get experienced advice to help you make informed decisions.
Saving for College
There are several ways to save for college, but one fact is true for all of them, and that is the earlier you start saving, the better. Here are a couple of popular college savings account options.
A 529 savings account for your child’s education allows you to contribute after-tax funds that grow tax free. Since contributions to the account are considered a gift by the federal government, you can contribute up to $14,000 a year and avoid the gift tax penalty. The beneficiary can use withdrawals to fund college expenses only. Unqualified withdrawals face a 10 percent penalty.
Coverdell education Savings Accounts also allows money to grow tax-free and qualified withdrawals are also free of tax. The limitations come in the $2,000 cap on contributions per year. Unlike the 529 plan, Coverdell accounts can fund educational expenses from kindergarten through graduate school. Coverdell accounts have a wide variety of investments to choose from. They are less flexible with beneficiary changes though, and all funds need to be distributed by the time the beneficiary is 30 years old.
When you are retired, what will you be paying for? Will you have your home paid off or will you still be paying a mortgage? Even if you do not have a mortgage, you will need to budget for property taxes. Automobile expenses and insurance will need to be allowed for as well. If your plans include travel and the pursuit of hobbies, you will need to set aside some money for pursuing those interests. Maybe you want to have some extra cash to be able to treat the grandkids to gifts on their birthdays. Medical expenses and insurance will vary, but they will be a necessity. To figure out an estimate of what you should plan for, use this retirement plan calculator.
By taking a look at your insurance and saving needs now, you will have a plan for the future and the least amount of surprises possible. By saving incrementally and protecting your family from risk, you can enjoy peace of mind about your family’s future.