Investing in a Legacy: Save Early and Often for Grandchildren’s College

//Investing in a Legacy: Save Early and Often for Grandchildren’s College

By Young Boozer, Treasurer, The State of Alabama

Comedy writer Gene Perret once said, “What a bargain grandchildren are! I give them my loose change, and they give me a million dollars’ worth of pleasure.” It’s true that as a grandparent, you can literally hand over pocket change or one-dollar bills during visits – and your grandchildren automatically feel like you’ve given them a treasure.

But what if you could do more for them? What if – in exchange for the “million dollars worth of pleasure” they interject into your lives – you can create a future for them with your financial means? All grandparents hope that they leave a lasting effect on those they love, but leaving a legacy through a tangible gift that will benefit a grandchild’s future is a treasure that cannot be measured.

Here in Alabama, our CollegeCounts 529 program offers a number of investment options in which grandparents can contribute early and often to a college fund for as many grandchildren as desired – and see savings grow over time.

Rising Costs of College, Rising Debt for Students
According to the 2013 College Board – Trends in College Pricing Report, national average costs for one year at a public, four-year, in-state institution (tuition, fees and room & board) has increased to $18,390 annually. It goes without saying that grandchildren born to families now will face higher costs per year in another 18 years.

Across Alabama, grandparents are taking notice of the rising costs of college and are working to ensure that their grandchildren do not have to bear the burden of debt alone – no matter how far into the future that debt may be.

Renae Sullivan of Northport, Ala., is one such grandparent. In 2013, her son was killed tragically in a car accident. The wellbeing and security of her grandson, then five years old, was top-of-mind for Renae. She soon went to a local credit union and opened an account to save for college expenses for her grandson. After a few months, she realized her money was not in a place that would ultimately produce enough return on her investment.

After consulting with her financial advisor, Renae made the decision to withdraw her money and instead invest in CollegeCounts Alabama’s 529 Fund. She now deposits funds into the account on every occasion that meant something to her son, including his birthday, his son’s birthday, Christmas and Father’s Day, among others.

To her, these funds will be a foundation on which her grandson can build his life – as well as a gift that should be used wisely. It will be a legacy she helped to build on behalf of her own son.

Ease of Options = Mind at Ease
Many grandparents have questions and concerns when it comes to investments. They are not only leery of the marketplace, but they also understand the youthful mind – and how it can change with the weather. Even more, they are both blessed and cursed with the reality of their own mortality, which also gives them pause as to where their hard-earned money will end up if something should happen to them.

CollegeCounts, Alabama’s 529 Fund, provides a number of options to account for a multitude of life situations – from questions surrounding where funds will go should a grandchild not end up attending college or trade school, to ones pertaining to distribution of monies in case of health crisis or death.

An Investment in a Legacy
As parents, you reared your children to be successful in life, as well as good parents themselves. And as grandparents, you want to see your children’s own sons and daughters reach the highest of their potential in their professional and personal lives.

Despite the questions that you all have and uncertainties that you all face, you understand that what you leave behind and the legacy you create for your family is worth the monetary and emotional investment. While you can never repay the “million dollars’ worth of pleasure” your grandchildren give you, you can take steps to provide a brighter future for them as they make their way through life.

CollegeCounts Alabama’s 529 Fund provides:

  • No minimum contribution requirements, allowing grandparents the ability to open accounts and deposit funds at any time through underlying investment funds, such as Vanguard, T. Rowe Price and Fidelity
  • Special tax benefits to Alabama residents saving for future college expenses, including a generous state income tax deduction of up to $10,000 for married couples filing jointly ($5,000 for individuals) on contributions to CollegeCounts each year
  • Beneficiary transfer to another member of the family if the original beneficially elects not to attend college or trade school
  • Complete withdrawal of funds if unplanned medical or other financial needs arise (subject to tax and 10% penalty on earnings portion)
  • Account continuation under a successor (as designated by the original account holder or probate) should incapacitation or death occur
2016-11-08T10:44:08+00:00 September 2nd, 2015|