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Dad Cents Transcript: Balancing College Savings and Retirement

Dad Cents Transcript: Balancing College Savings and Retirement

August 24, 2023

[00:00:00]Jual Fuchs: Gentlemen come to that, a podcast of folks looking to expand the knowledge about finance. This podcast is hosted Jason.

[00:00:21]Jual Fuchs: Sage financial bikers and I love them. And now you host my daddy.

[00:00:29]Jason Fuchs: Thanks Jewel. You did such a great job. You ready to start the show? Yes.

[00:00:35]Jason Fuchs: Ladies and gentlemen, welcome to Dad Sense. I'm your host, Jason Fuchs. With me is the ever so lovely. Amber. Hey. Hey. Hi there. Thanks for coming. Thanks for having me. Good to have you on the show. I'm always happy to be here and we're happy to have you. Aw, ladies and gentlemen, did you know that 90% of Americans are anxious about money, [00:01:00] but.

[00:01:00]Jason Fuchs: Did you know that people who listen to Dad Sense are three times happier than those who don't? That's right on Dad Sense. We turn your financial frowns upside down and Dad Sense offers tons of valuable financial advice to help you reach your full potential. You get our 2 cents. Get it. Advice across investments, taxes, saving money, managing debt, and building income to name a few.

[00:01:28]Jason Fuchs: So ladies and gentlemen, keep listening and empower your finances today. And guess what, Amber? Oh, what? Not only am I the managing director, a financial advisor, but I also happen to be a dad. Yes. So I'll share my wins, my struggles as a father too. And I am fortunate to have you with me to help. Oh, thanks.

[00:01:50]Jason Fuchs: As you often do. In life generally, I'll do my best. So ladies and gentlemen, enjoy this podcast today. And if you [00:02:00] want more, head over to sage path It's in the description of the podcast, or keep listening on whatever platform you're using right now. And by the way, ladies and gentlemen, thank you for being here.

[00:02:14]Jason Fuchs: Truly, this show is all about you. We could not do this show without you.

[00:02:20] Today, Amber, we have a fantastic episode and it fits into our theme of the month. Can you guess what it is? The theme of the month? Well, you should know what the theme of the month is. I'm at the episode, oh, the theme of the month is college, back to school. Oh, gosh, no. There's so many topics. There really are well educational attainment.

[00:02:46] It's the bedrock of the American dream. We all want our kids to do better than us, and we will do anything to help them achieve that. I mean, that's how we feel about Juul, right? Yeah, a hundred percent. And I'm sure all of our listeners [00:03:00] out there feel the same way about their kids, their grandkids. But unfortunately, there are dreams and then there's reality.

[00:03:06] College costs have exploded over the past 20 years, and as a result, most parents and some grandparents, they find themselves fighting a battle on two fronts, saving money for college and saving money for retirement at the same. Time. Mm-hmm. And that might be us, Amber. Yeah. When Juul goes off to college, I'm gonna be 53 and you'll be a young 58.

[00:03:32] And we're set to retire. 62, 65. So hopefully she doesn't get her master's. I thought we were gonna retire like 42, 45, something like that. Oh yeah. Alright, ladies and gentlemen, thank you for joining and that is our financial topic of today's episode. Ladies and gentlemen, should you use your retirement to pay for college?

[00:03:57] Amber, we're not gonna have a recipe today. [00:04:00] I've had a little bit of pushback with the recipe, so we probably won't go that route anymore, but I will share special recipes from time to time per your request. Yeah, I was gonna say, I hope I like it when you have recipes, so at least once in a while and I'm still cooking, so that doesn't change.

[00:04:16] Yes. Otherwise will be in trouble. True. But what I do want to try is something new. Juul lately has been cracking me up and I know she does the same thing with you. Oh yeah. Little comedian. She's always trying to make me laugh and she's trying to tell jokes and. It's really funny the way she does it. So what I wanna start doing is joke of the episode brought to you by Juul.

[00:04:41] Okay. And what I'm gonna do is I'm gonna try to record these in the moment, or maybe I'll give her a little nudge, um, and we can feature 'em during each episode at the beginning. What do you think? I think that'll be fun. I think it'll be a ton of fun. Yeah, she's, she's a riot. She is. She really is. Well, you had an adventurous weekend.[00:05:00]

[00:05:00] I was away. I was skydiving, ladies and gentlemen. Skydive Orange up in Virginia, orange, Virginia. Go figure. They had what's called a boogie. Yep. And a boogie is just a fancy way of saying a bunch of crazy skydivers get together and jump outta planes. Mm-hmm. All at once. And ladies and gentlemen, I want you to picture this.

[00:05:20] A giant airplane hanger full of humans, parachutes, and those little backpacks that hold our parachutes. 200, 300 people. I don't know exactly how many people were there. But it was so much fun, Amber. Yeah. There were so many well-known worldwide coaches, record breakers, so I got a ton of advice. I was up there with some friends.

[00:05:46] I had other friends coming from Dr. Other drop zones. I made new friends and Oh, I was so thrilling. That's so cool. Yeah. I like it. And ladies and gentlemen, my discipline in skydiving is called free flying. Mm-hmm. I also like what's called [00:06:00] angle flying. And it's funny, when I started skydiving two years ago, I didn't realize there were disciplines.

[00:06:06] I mean, you get out of a plane. Yeah. You fall to the ground and you pull your parachute. That's what I thought. Right. And that's what we call belly. Mm-hmm. But over the years, the skydiving world has been more innovative and there are things like freely, which is what I do. And ladies and gentlemen, if you've ever been to an I Flight tunnel and seen those instructors showing off, Going up, down, sideways.

[00:06:27] They look like they're sitting, they're upside down on their head. They're right side up. They're going round in circles. That's called free flying. It looks kinda like break dancing in the air. Mm-hmm. And that is what I love doing. Mm-hmm. So I got to do a bunch of that. I also do, it's angle flying and angle flying is just a fancy way of saying tracking and tracking and angle flying.

[00:06:48] You're just flying with the horizon. So rather than falling vertically, You're actually falling horizontally. Mm-hmm. And it's really neat by adding an angle to it, you go super duper fast. Mm-hmm. So over a hundred miles [00:07:00] per hour and it is a ton of fun. Yeah. And you can bring your buddies with you. So in free flying, we do things called docking where we come in and hold each other's hands.

[00:07:11] We go upside down, grab each other's feet. We get in a circle, we carve around each other, and then angle flying. I could have people to my left, people to my right people below me, above me. It just makes it more enjoyable when you've got a large group of people. Well, when, when you guys get together for events like this, you can practice doing some of those things.

[00:07:32] Exactly. And for a lay person, I look at it and think you guys are doing like formations. Yep. And making shapes and Exactly. And things like that. Right? Yeah. Yeah. And at these boogies, since there's so many people, and the planes tend to be bigger. Yeah. And there tend to be more planes. We can get up faster and we can get up more.

[00:07:50] Right. And you can get up with a lot together. A lot of people together. Together. Yeah. Whereas in deland where I jump, I'm usually with two, three, maybe four people. Right? So the planes are smaller. It's a [00:08:00] little bit slower, I got 10 jumps in on Friday and another seven on Saturday.

[00:08:06] Wow. So my fingers are a little numb from packing my parachutes 17 times. That's the equivalent of about three hours of packing parachutes. My body. Yeah. My body's a little sore, but, well, and it was worth it. And also for, for other people who had just haven't even seen anything like this before, like doing the formation where you guys are docking and, um, doing different things together as a large group.

[00:08:31] Mm-hmm. When I look at it, and I've seen, I wasn't there with you, but when I've seen it in the past, to me, when there's that many people doing those type of things, it looks like you're doing. Becoming a human kaleidoscope up in the sky. Yep. Pretty much. Right. And it's sha like you make a formation and then you can shift and change and it makes another formation and it looks really cool.

[00:08:51] Visually. That is belly mostly. Mm-hmm. Yeah. And, and by grabbing each other's arms and shifting to legs and you grab the person next to you, [00:09:00] you rotate 180 degrees. 360. Yeah. It makes it look like a kaleidoscope. Yeah. And, and so how being able to participate in an event like that, Boogie is unique and it's fun because you don't get to do stuff like that very often.

[00:09:14] Hundred percent. Yep. Yeah. So thank you Skydive Orange. Thank you to everyone that helped organize this event. It was incredible. We all had so much fun. We got all the jumps we wanted, and it's all because of your beautiful organization. So thank you so much Skydive Orange for putting that together. We appreciate you greatly.

[00:09:36] And while I was having fun jumping outta planes, you had a bit of adventure, what? Saturday night, I think. Uh, yeah. Was it Saturday night? Yeah, we, yeah. So let's get into that. I, I, we've got some tips for our listeners. Yeah. And that's what we'll get into now. Yeah, well you were gone. Juul had her first real sleepover.

[00:09:56] Woo hoo. Yes. And so that was interesting [00:10:00] because, um, it was with a, a good friend of hers and the her friend came over to our house and Juul has had sleepovers before with her grandparents. And thank you Nana and Papa. Yes. And those. She loves doing that. She always has a great time. And then also we've gone outta town with her, so she's traveled with us and slept other places.

[00:10:24] Yeah, like new places. She's been able to do that before with success. Floors, beds. Chairs, really sleeping bags. Yes. Sometimes. There was one time when she was on a couch and ended up on the floor. She's a great traveler. She really is. Yeah. Um, But this was her first time having the sleepover with a friend.

[00:10:42] And, um, I would say, although I do think it was a success, success, it was a challenge. And her, her friend ended up actually going home. Yeah. And I'm sorry I couldn't before the end of the night. Uh, she, she wanted to be in her own bed. She got a little scared. Aw. And um, so yeah, her [00:11:00] mom came and picked her up before they actually fell asleep.

[00:11:02] Yeah. Yeah. Oh, that's a bummer. Yeah. So if you had to give our listeners any tips regarding sleepovers, what would those be? Yeah, I think there were three main takeaways, things that I would've. Changed or tweaked or considered knowing what I know now, you know, after what I went through. Okay. Um, the, the first thing is really considering their age and maturity level, and as a parent, Versus what their desire is.

[00:11:37] Right? Yeah. So four year olds say a lot of things. Yeah. But are they really relevant? Right. So I think, you know, Juul is four, almost five. Mm-hmm. And her friend just recently turned four, and I think they're a little too young. Juul has expressed her desire to have a sleepover for quite a while now. Um, and I don't, I'm not really even sure where that idea [00:12:00] and notion came to her from, to be honest.

[00:12:02] But I mean, she loves, she does love having sleepovers with her grandparents, so maybe it built on from something from that. Mm-hmm. But at the end of the day, I think that they were a little. Too young, maybe not quite ready. Well, and it was calculated, I mean, like you said, she's had so many sleepovers with N and Papa.

[00:12:19] Yep. At at their place too. Yep. We've gone to hotels, Airbnbs. Yep. Other family members' homes and had sleepovers and we thought she was ready. Yep. But not so much. You know, I, and that's okay. I mean, I know, and, and I had, I did have that concern going into it, or at least I wouldn't say concern. I had that thought.

[00:12:40] And, you know, I think maybe I should have trusted my instinct on it because as I was thinking and preparing and, and try, we did a lot of things to try to make the sleepover special. Um, when I was thinking about it, I do remember almost all of the sleepovers that I had as a child. I was scared. [00:13:00] Whether I actually stayed and slept there the whole night or whether I, I don't know that I ever called to go home.

[00:13:07] I don't remember that. But I do remember I was always scared. Interesting. I don't know if I ever actually slept. I think I might've just like laid there the whole time staring at the ceiling. So, you know, I have vivid memories of that and thinking about that, you know, that age, Juul's age, um, That's something that you can't necessarily overcome?

[00:13:30] Well, I didn't have my first sleepover until I was about eight years old, and it was a disaster. I mean, I was staying over at my really good friend Jeremy's house. I was so excited. I. I woke up in the morning and I was wet, and I'm thinking, oh no. Oh no. I drank too much soda. Yeah, I wet my sleeping bag. Oh.

[00:13:46] So I quickly rolled everything up, ran upstairs, called my dad, and waited outside on the steps for what seemed like eternity. Oh. Until he finally picked me up, and I don't think I had a sleepover again until, I don't know, maybe 12, 13 years old. [00:14:00] Yeah. So kind of ruined the, uh, experience for me, but that's my world.

[00:14:06] I, I don't remember when I had my first one. I just, any sleepover that I have a memory of, I know I was scared in some capacity or another. Alright, so that was tip one. Yes. We've got two more, right? Yes. You've got tip more. Not me. I wasn't there. I'm not taking credit for these tips. Yeah. This, even though this is my show.

[00:14:24] The, I'm kidding. The, the second tip is, Building on what you already have had success on. So in our example, jewel has already slept over at her grandparents and had a lot of success there. So I think that the next step should probably be to have a sleepover with her cousins. Oh yeah. Good idea. Who, you know, or maybe, uh, they're, it's just different.

[00:14:49] It's new. Their ages are a little bit different. It is a physically a little bit further away as well. Still not too far. So we're expanding. It's a jewel. I [00:15:00] mean, she doesn't know that, so, right. And so for, for us though, we're kind of expanding that circle of trust, like starting where we are. Ooh, we're already never known.

[00:15:08] My favorite movie series. Meet the Fuckers. Oh, I wish they would release another one. I love that series. I used to watch that with granddad. Right before Thanksgiving, they would release the movies and we'd go to the movie theater together. Aw. It was so much fun. That's awesome. Okay. So yeah, I think, I think, you know, we maybe jumped a little too far this time.

[00:15:26] Okay. Yeah. Okay. And what's a, what's the last tip you have? The third tip, I think is also, you know, looking back in retrospect, it should have been a no brainer. But if I think I know where you're going with this, if you're gonna introduce dessert into the equation, Do it before dinner instead of after.

[00:15:45] Yeah. And you know, strategize on how you can make it a treat or whatever you wanna do. 'cause we've done this with Juul independently. On many occasions where we build it in and, and we make sure she knows, like she either has to earn [00:16:00] it or she has earned it, or it's a special treat or there's like a thing associated with it.

[00:16:04] She has to do something to earn it. It could be as quick as, Hey, go clean your room, go clean your playroom. But she has to do something to get that dessert early. Right. And, and so what we typically do on a more normal scenario is that, If we offer dessert, JU also has to earn it and she gets it after dinner.

[00:16:21] Mm-hmm. So it is kind of the same thing, but that's what I had done at the sleepover is I did offer them dessert, but my thought was, They're probably gonna have a hard time getting through dinner together. 'cause they're gonna wanna talk and chat, which they did give off and that's fine. That's what slumber parties are all about.

[00:16:38] Exactly. But having fun with your friends, I had the dessert built in as an incentive to, to help them achieve finishing their dinner. Yeah. Successfully together. The thought was in the right place. Right. Yeah. Um, but I do think that in this scenario, having dessert first before dinner, if you're gonna offer it, Makes way more sense because then you have more [00:17:00] time for the sugar to wear off and fall.

[00:17:02] Fall that allows them opportunity to actually fall asleep. Yeah. Yeah. Okay. So ladies and gentlemen, three tips for a slumber party brought to you by Amber Fuchs based, based on our uh, learnings. But remember you heard it first here on dad sex. I'm kidding. Alright, so I think. It would be a great time to get into the financial topic of today's episode.

[00:17:26] What do you think, Amber? Sounds good. All right, ladies and gentlemen, Amber, let's jump into it now.

[00:17:39] All right, ladies and gentlemen, welcome to the financial portion of today's episode. We are talking about should you use your retirement to pay for college. Oh, Amber, that American dream that we all have, that house with the picket fence. You got the dog in the yard, [00:18:00] you got the baby, and then fast forward 18 years college.

[00:18:05] I think most parents, most grandparents, they want a better life for their children and their grandchildren. Yep. And we try to, I. Strive to achieve that, right? Yeah. But unfortunately, the reality is college costs are crazy.

[00:18:23] I mean, it's exploded over the past 20 years. Yeah. Look at the past three years alone, right? Crazy. And in my opinion, it's not like you're getting any more for that explosion. But anyway, that's neither here nor there. But as a result, parents, grandparents, they have a, a problem. They're, they're fighting this dual battle, saving for retirement and saving for college.

[00:18:43] And you're doing both of these at the same time, ladies and gentlemen. We have these things called individual retirement accounts.

[00:18:51] We all know these as IRAs, right? Amber? Right? So our listeners might be eyeing those IRAs for help. Now, [00:19:00] is it worth tapping your i r A to pay for college? Well, I think we should talk about it a little bit, Amber. Okay. And this is a pretty short episode, but we'll get to the bottom of it. Okay, let's do it.

[00:19:10] Alright, so ladies and gentlemen, Amber, you can use your I R A Money for qualifying educational expenses. Now that is the key. Word qualifying. One advantage of I R A withdrawals is that funds can be used for any qualifying educational costs. That means tuition, student fees, et cetera. Importantly, the withdrawal amount cannot exceed the amount of your qualifying expenses.

[00:19:42] Right. So Amber? Yes. The bill is $10,000. You take out 10,001. Guess what? There's gonna be a million dollars in fees on the $1. Probably. That makes not a million dollars in fees, but yes, there will be fees on it. Yeah, but the [00:20:00] disadvantages are obvious. You're taken away from retirement savings. Mm-hmm. And you're reducing the amount of earning power you previously held.

[00:20:08] Think about what these things are designed to do. Amber IRAs are designed to grow money over the long term. Right? You're getting interest on top of interest. On top of interest, because the account is not until you start taking money out of it, right? So you're taking away from future retirement savings and that means you're reducing the amount of earning power you previously had.

[00:20:33] Right. And you're reducing the earning power if you make that deduction. Exactly. Yeah. And you're also faced with the I R A annual contribution limits. That's 6,500 for 2023. And that makes it hard to restore your previous savings level. 'cause think about it, this year if you take out 10. You can only replenish 6,500.

[00:20:54] Right? Next year you do the same thing. The 6,500 might increase. The I R S typically [00:21:00] increases those amounts every year, but you're still limited. Mm-hmm. There are ways to replace what you take out for people. Over 50, the law allows you to contribute an extra thousand dollars through a ketchup contribution, so that brings your total to $7,500.

[00:21:18] Now, that isn't a lot, but. It can help restore some of your withdrawal. Does that make sense? Yes. But is there a mustard contribution? Honey mustard? Yes. Oh, okay. I like what you did there. Ketchup. Well, what about a one? There is a one time ketchup contribution of a thousand dollars. If you're 50 and older.

[00:21:41] Uh, I'll take it. Okay. Let's go ahead and wrap this up, ladies and gentlemen. I get it. I didn't give you a definitive answer, but it does depend on your specific situation. Withdrawing from an I R A to pay for college has many [00:22:00] unseen consequences that can harm your retirement plan and make your golden years leaner.

[00:22:06] Think about it. You're saving your entire life for what's to come when you're not working anymore, Amber, right? Mm-hmm. Mm-hmm. But now you're taking money out of that account. It's a finance college, which is incredibly important, don't get me wrong. Mm-hmm. But if retirement is supposed to be happy, fulfilling, enjoyable, it's supposed to be your golden years and you have to take a pay cut.

[00:22:32] Well, how enjoyable is that gonna be? Yeah. I mean, you're used to 30, 40 years off of living a certain amount of income. You get to retirement, you're supposed to be able to have fun, do what you want, but you can't because you don't have the money. Mm-hmm. And that's a problem. So ladies and gentlemen, one of your best betts is to plan carefully for college as soon as possible for your children, your grandchildren.

[00:22:56] So you're not forced to decide between retirement or college. [00:23:00] Mm-hmm. Yes, you can have them both. No matter what you do, seeking input from a financial professional like us, it's usually wise. So ladies and gentlemen, give us a call. Let's discuss your unique situation. We are passionate about helping people plan for the future.

[00:23:20] As always, we are here as your trusted resource. Thank you ladies and gentlemen, for listening to the show today. I'm wondering, do you know anyone like you who sometimes gets stuck navigating overwhelming financial situations or. Who could generally benefit from the info here on Dads Sense? If so, would you mind sharing this episode with that person or anyone you think would enjoy it?

[00:23:47] We would love to have more listeners just like you. And if you are enjoying Dads sense, the biggest compliments we ever get are honest reviews if you've left us a review. Thank you. [00:24:00] We appreciate you. And if you haven't, Would you mind leaving us one? And if the review isn't positive, let us know what we should do to improve it.

[00:24:08] We read all of those reviews, so again, thank you so much. And ladies and gentlemen, if you need help managing your financial affairs, we are accepting new clients. Head to sage path to see what we're all about. That is in the description of the podcast. You can call us, email us. All of that info is in the description.

[00:24:28] Like I said, thank you again for joining us. Ladies and gentlemen. Amber, thank you so much for being here. Thank you for having me. It's been such a joy. It's always fun. I agree. And ladies and gentlemen, we will see you next Thursday for a new episode of Dad Sense. Make it a great day. Oh, oh, oh. Santa Claus, otherwise known as Old Saint Sage.

[00:24:56] Jason has me on payroll, so his three year old dog [00:25:00] get all the toys ahead of schedule. I'm visiting. We don't want to irritate. Securities and investment advisory services offered to F S C Securities Corporation, F S C Member Finra, s i, PC F S C is separately owned in other entities in marketing products or services.

[00:25:24] Referenc to our independent of f s, Jason Fugues, Amber Fu Financial Advisor. Oh, oh, oh.