Most people plan to retire in their 60s or 70s, but some people want to retire a lot earlier. It’s part of the growing FIRE movement where people aim to retire in their 30s and 40s in the hopes of getting more enjoyment out of life.
The Chubby FIRE subreddit brings many of these individuals together, and a post about college planning recently got a lot of attention. Part of the reason people retire in their 60s or 70s is because all of their children are adults at that point. However, if you want to retire earlier, you also have to consider education costs.
One Redditor asked if you have to spend $25,000 per year for each child when in college, in addition to college tuition. Fellow Redditors in the Chubby FIRE community shared their thoughts, but it’s good to speak with a financial advisor if you can. Any opinion, including this one, cannot fully account for your unique financial situation.
Key Points
How much do you really need to save for your child’s college education. Parents debate in the Chubby FIRE Reddit community.
Parents share their strategies for keeping college costs down and maximizing their money.
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Put $50,000 Into A 529 Plan And Forget About It
One Redditor suggested putting $50,000 into a 529 plan the day your child is born and then forgetting about it. Of course, you have to put the money into a good ETF for the funds to compound, but if you do that, you may have enough money for your child’s college education.
You’ll get more mileage out of a 529 plan if your child gets some scholarships and enrolls in a state university. The commenter explained that they will cover 85%-90% of the tuition and expect their children to get a part-time job for the remaining 10%-15%. The Redditor also said that their children must earn fun money if they want it.
This approach makes it much easier to finance your child’s college education. The money will grow in the background as you continue to build your other financial accounts.
State Universities Keep Costs Down
State universities already offer good deals for students who live in the state. However, adults save money in additional ways by having their children in state universities. Flights to visit home and rent in excess of the university’s housing estimate were two of the top expenses that came in when commenters shared their thoughts.
You can avoid these costs altogether if your child is a commuter who goes to a state university. Even if your child dorms, it’s possible for them to get home via car or public transportation instead of getting on a plane.
It’s impossible to know which college your child will want to attend. Regular airplane trips may be the norm, but if your child goes to a local university, you can save a lot of money from additional costs.
Not Every Child Goes To Harvard
College is expensive, but some of them are more expensive than others. Chubby FIRE people tend to be ambitious, especially with how much they save. However, one commenter suggested that people are exaggerating the costs of college.
“People here seem to fund their 529 like every one of their kids is going to do 4-6 years at Harvard. I’m targeting $120k per kid, which is enough to pay for 4 years in state and all the costs associated with it. If they end up needing more, I can help outside of 529,” one commenter explained.
Other commenters responded and shared that they have similar plans. Elite colleges are not required in some of the Redditors’ homes. An elite college doesn’t guarantee success, and one Redditor observes that they know people from elite universities who are at similar or worse points in their careers than the commenter.
“I think I’m going to encourage in-state, but even without, I’m hoping scholarships and grants can make up some of the balance. Still, I’m kind of baffled at the variances here,” the commenter concluded.
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