An Annuity Can Fund Looming College Tuition

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When I entered college in 1982, my parents were similar in age to many of my friends’ parents, meaning they were only in their mid-40s when they dropped me off on campus in rural Maine 40 years ago. They were empty nesters in their late 40s by the time I began my career in 1987.

Contrast their experience with that of my wife and me. Like many couples of our generation, we married a bit later and waited to get financially established before starting a family. In fact, our youngest was born when we were 42, about the age my parents were when my older sister was already in college.

Fast forward.

We will both be 59 this year, and our children are teenagers. We’ve done a good job of saving and investing for retirement. Unfortunately, our college savings plans are not nearly as well funded, particularly as it pertains to funding for the youngest, our 16-year-old son. The two years between now and when we will need to write the first tuition check for him will go by very quickly, which leaves us facing a classic risk/reward conundrum. If we play it safe, we will earn very little in liquid savings accounts. and certainly not enough to make up for lost time. On the other hand, if we are less risk averse and leave tuition assets in the capital markets, we may end up writing a check from a smaller base if a bear market appears at the wrong time.