How much should I start saving for my child's education?

[madbach]

I think the Roth IRA is the best way to go personally.

[mizzourah2006]

Originally Posted by madbach

I think the Roth IRA is the best way to go personally.

But, you can only withdraw contributions before you are 59.5. I will only be in my late 40s when my daughter attends college, so I would only have access to about $100k assuming I started right when she was born.

[Lowexpectations]

Originally Posted by mizzourah2006

But, you can only withdraw contributions before you are 59.5. I will only be in my late 40s when my daughter attends college, so I would only have access to about $100k assuming I started right when she was born.

I think that's a pretty good dent combined with your personal retirement as an option if she didn't need it

[mizzourah2006]

Originally Posted by Lowexpectations

I think that's a pretty good dent combined with your personal retirement as an option if she didn't need it

I guess that depends though, doesn't it? If we assume even a continual 3% tuition growth rate over the next 18 years.

If we are talking about a local in-state school that is currently charging $10k/yr for tuition it will be about $17.1k/yr when she goes to school. But, if I would like her to attend (and she gets in) a school like Harvard that is currently $48k/yr for tuition now we are talking about over $81k/yr for tuition alone. It would cover the in-state, but would barely cover a year at Harvard.

Now having said that, I don't believe Harvard will cost the average middle class person $81k/yr to attend in 18 years, but even if it is half that. Contributing $2-3k/yr to a 529 wouldn't be overkill in either scenario, especially after factoring in room and board.

If your kid decides not to go to college you do have to pay a penalty, but if they go to college and get scholarships you can withdraw an amount equal to the scholarship penalty and tax free. So it really comes down to whether or not you think your kid may or may not go to college.

Even if you decide to use a Roth it assumes you are contributing to a Roth. I try to put as much in my traditional IRA as I can, so we really only end up putting in about $5k/yr in a Roth, the other $6k we can fit into the TIRA at this stage in our lives. Bottom line, it's definitely an option, I don't plan on making it my main option to finance my kids college. A bigger problem also comes into play if you have 2-3 kids to split the Roth money amongst.