Wealth Accumulation: Retirement Planning and Children's Education

Children's Education
Are you planning to provide your child or children with a college education? If so, do you know how much it will cost? Do you know how you will finance this goal?

Meeting the financial costs of educating children is a financial goal for many people. The strategies to help you meet this goal may differ from other saving and investment strategies, however. Always investigate the tax and financial aid implications of your college-saving strategies.

The earlier you start planning for a college education for your child, the more time you will have to accumulate funds. Consider and plan for the cost of the entire college education. However, because saving ahead for the total cost may be unrealistic for parents, all possibilities need to be explored, including scholarships, grants, loans, and work-study programs. Learn the details about each one.

To determine what you need to invest for college, complete the worksheet found on the Calculating What You Need to Invest page.

Retirement Planning
Planning for retirement is a challenge for everyone. Again, the earlier you begin, the longer you will have to accumulate funds and capitalize on compound interest. A plan designed to meet specific retirement goals may be separate from or part of the investment building block.

Some people have given a great deal of thought to retirement. About 46% of working Americans have made a retirement savings calculation, according to the 2001 Retirement Confidence Survey. Seventy-one percent of Americans have already begun to save for retirement. Unfortunately, this means that almost one-third have not yet begun saving. Most experts believe that regular, systematic savings is a habit that is best established early and maintained not only throughout the working years, but into the early stages of retirement since people are living much longer. Today, many people spend as many years in retirement as they spent in the workforce.

Financial experts have long described sources of retirement income as the three-legged stool: Social Security, company pension, and personal savings. Now with the growing concern over the future of Social Security, the reduction in benefits offered by employers, and the low personal savings rate, many see the three legs of the retirement income stool becoming shaky. Many say that the stool may need a fourth leg. paid work after retirement.

As the Social Security Administration phases in automatic mailing of Personal Earnings and Benefit Estimate Statements to all wage earners, check yours for accuracy. It contains information that provides an excellent basis for retirement planning. Contact the Social Security Administration (1-800-772-1213) (See Social Security Online <www.ssa.gov>) to obtain a benefit request form.

Another source of retirement information is your employer. s personnel department which may have general tips on retirement as well as specific information about investments available in your pension plan. Many online sites provide information about retirement planning.