Author Topic: Retiring while kids in college?  (Read 1593 times)

Research-Geek

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Retiring while kids in college?
« on: March 02, 2019, 07:14:53 AM »
Anyone have experience taking the step from work into retirement while kids are actively attending college?

How did you handle their financial aid situation/change?


-modified original post to be more specific:

I am looking for anyone who retired or lost their job between when their children were in their Senior year in HS and their Junior year in College. Specifically, people who were already getting a financial aid package from a college and had to deal with a big change with respect to  gross income and the expected family contribution mid-stream.
« Last Edit: March 05, 2019, 11:51:55 AM by Research-Geek »

Unique User

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Re: Retiring while kids in college?
« Reply #1 on: March 02, 2019, 07:29:10 AM »
PTF as this will be my situation next summer after DD's freshman year. 

radram

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Re: Retiring while kids in college?
« Reply #2 on: March 02, 2019, 09:09:09 AM »
This was not really an issue for us. No financial aid due to net worth, so income change had no impact. Her 529, after investing $3,000 per year since birth to take advantage of the state tax deduction, had 4 years worth of tuition, room and board, books, food, etc. She is living on that and anything left will be saved for grad school, her children, whatever(her choice).

I am interested what change you expect, and what exactly you think will need to be handled.

Research-Geek

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Re: Retiring while kids in college?
« Reply #3 on: March 02, 2019, 09:15:02 AM »
Financial aid is 90% based on prior-prior year adjusted gross income.  So if one drastically cuts their gross income they wouldn't get the financial aid they would normally get until after a 2 year lag...
  If I had retired 2 years ago I wouldn't have a problem/issue.

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CowboyAndIndian

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Re: Retiring while kids in college?
« Reply #4 on: March 02, 2019, 12:45:24 PM »
PTF

radram

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Re: Retiring while kids in college?
« Reply #5 on: March 02, 2019, 02:31:26 PM »
Financial aid is 90% based on prior-prior year adjusted gross income.  So if one drastically cuts their gross income they wouldn't get the financial aid they would normally get until after a 2 year lag...
  If I had retired 2 years ago I wouldn't have a problem/issue.

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But that is why I am wondering what you are asking about. If kids are in college, and you FIRE, there is NO change for at least 2 years, until your reduced income might have an effect on financial aid. But even so, that change would be an INCREASE in aid, so what exactly do you need to handle?

Are you asking if people purposefully FIRE 2 years BEFORE kids enter college in order to increase their financial aid?

Research-Geek

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Re: Retiring while kids in college?
« Reply #6 on: March 02, 2019, 06:44:11 PM »
For this first 2 years I am not making much yet the expected contribution will be very high like we are still making the money we made 2 years prior.... 
Try paying three ivy tuition bills for two straight years.... ;-)

 I am looking for  FIRE people who have navigated this with colleges to seek their advice and hopefully gleam some positive feedback.


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radram

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Re: Retiring while kids in college?
« Reply #7 on: March 02, 2019, 11:19:53 PM »
For this first 2 years I am not making much yet the expected contribution will be very high like we are still making the money we made 2 years prior.... 
Try paying three ivy tuition bills for two straight years.... ;-)

 I am looking for  FIRE people who have navigated this with colleges to seek their advice and hopefully gleam some positive feedback.


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Now I understand. I will not be of much help to you, but I am interested in what you can find out here. We were committed to paying for a 4 year degree at a state school in our state for our children. Anything more was on them. Knowing this, my daughter only applied to 2 private colleges(none ivy league). She was accepted to 1, but turned them down due to costs.

I would expect many on this site would not commit to paying tuition bills "at any cost", and have instead discussed the limits they are able to help for their children's education. We were not willing to pay for 1, let alone 3 private tuition bills.

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Re: Retiring while kids in college?
« Reply #8 on: March 04, 2019, 07:59:23 AM »
Following as this is our plan.
FIRE at roughly the same time as our child starts Freshman year.
Granted, we're considering keeping P/T work for my spouse due to amazing medical benefits.... but the plan is to seriously downshift.

FWIW, we will have about 4 yrs worth of state school tuition/expenses in a 529 at that point too. Probably not a lot leftover but ample to cover the basics.


Car Jack

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Re: Retiring while kids in college?
« Reply #9 on: March 04, 2019, 09:04:22 AM »
My plan is simply this:  I am not retiring now.  My original plan was to retire at 62, which I just turned.  With son #1 having transferred, losing time and now heading to grad school and son #2 just starting community college this fall, I'm not going to leave the job that pays quite a bit plus gives us much reduced cost health insurance.  I guess at this point, I'm looking at 65, when a pension hits a point where it no longer accumulates for waiting and I can take a lump sum and son #1 will be done and son #2 will be far enough along to know what's coming.  Plus hitting my double safe retirement multiple.

Dicey

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Re: Retiring while kids in college?
« Reply #10 on: March 04, 2019, 10:34:03 AM »
Paging @soccerluvof4, because he knows.

secondcor521

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Re: Retiring while kids in college?
« Reply #11 on: March 04, 2019, 01:27:27 PM »
I retired at 46.  At that point my oldest had spent 1.5 years at a public university courtesy of a full ride scholarship and a withdrawal from his 529.  I also had a 10th grader and an 8th grader.  I had enough in their collective 529/ESAs to cover a total of 4 years of expenses at an average public university, which is what I had promised them.  My plan was (and is) to use those funds judiciously, encourage careful planning and consideration of value, and then go back to work if that money ran out.  Currently it looks like there will be a modest surplus, which I will turn over to my kids once all of them have graduated from college.

@adkdadto4, retiring and sending three kids to Ivy League schools are both optional.  I think the schools' position will be that you chose both of these things, and if that puts you in a tough spot, then you should have planned ahead a little better or worked longer.  If you spent all of that money from those high prior-prior AGI years instead of saving it for college, then the schools will probably not feel any compulsion to help you too much.

If you lost your job, especially if it was after you filed for financial aid in any given aid year, then you can ask the aid office(s) to review your changed financial circumstances, and they generally will increase your aid offer for that year.  I do not know how it works if your kid commits to attending a school and then you lose your job, say, during the kid's sophomore year; the school may try to help or they may just say tough luck and encourage you to transfer your kid somewhere cheaper.  It doesn't sound like you lost or are losing your job, though.

If you can get your prior-prior AGI down to under $50K, then for federal aid purposes the school will ignore assets; yes, this again requires planning ahead.  At least some of the Ivy Leagues (and Stanford) make attendance free for families making middle income (I believe Yale is <$100K); these plans may apply to you.  I don't know if the Ivy deal uses prior-prior like FAFSA does, or if they're willing to look at your current year situation.

SimpleCycle

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Re: Retiring while kids in college?
« Reply #12 on: March 04, 2019, 01:48:40 PM »
Ivy League schools us the CSS Profile, which has significant differences from FAFSA.  In particular, most CSS Profile schools count home equity as a parental asset.

Just go plug your actual numbers into your kids school's net price calculator.  That will tell you the likely financial aid impact.

Research-Geek

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Re: Retiring while kids in college?
« Reply #13 on: March 04, 2019, 01:57:29 PM »
Yes I know all about the CSS profile and EFC and  that's not what I'm asking. ( but thanks for the  reply of course)

I am asking to find other people who have retired in the middle of their kids being active in college sometime between their kids' High School senior year and their college junior year for example.
« Last Edit: March 04, 2019, 01:59:29 PM by adkdadto4 »

SimpleCycle

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Re: Retiring while kids in college?
« Reply #14 on: March 04, 2019, 02:00:09 PM »
Yes I know all about the CSS profile and EFC and  that's not what I'm asking. ( but thanks for the  reply of course)

I am asking to find other people who have retired in the middle of their kids being active in college between their high School senior year and their college junior year.

As far as I can tell, you asked two questions.

1. Has anyone done this?
2. How will it impact financial aid?

I was answering #2.  If that was not your question, I don't know what you are asking.

soccerluvof4

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Re: Retiring while kids in college?
« Reply #15 on: March 04, 2019, 02:01:53 PM »
Paging @soccerluvof4, because he knows.


Sorry was out of town visiting one of mine in College!

What we did/are doing was to provide 4 years of In state college via 529's. Currently 2 are in college one on a full athletic with a stipen and one on about 60% for athletics so we used some money from the full rider and rolled it over to help the 60% and the rest down to the 2 youngest because they are both out of state.

It was still required by one of there Universities to apply for FAFSA and to this day I am not sure the reason why because you simply can decline it. What I did learn is that not all investments count and you would have to search it , it gets pretty in depth but there is a very large conversation about this on bogleheads.org that will answer and if not all your questions.  But I fire'd 4 years ago and basically have two that are sophomores so retired before they went into college and have 2 to go. There is also so much free money / grants etc.. out there that kids can get if they put the work in. But in regards to your question the key is obviously to make your income as low as possible to get as much as you can through FAFSA unless you want to cosign and for me , no thank you !    No offense but your question is kinda confusing.

Research-Geek

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Re: Retiring while kids in college?
« Reply #16 on: March 04, 2019, 02:04:37 PM »
...
If you lost your job, especially if it was after you filed for financial aid in any given aid year, then you can ask the aid office(s) to review your changed financial circumstances, and they generally will increase your aid offer for that year. 

Thanks for sharing secondcor521 , I appreciate your time and info. ( and congrats on your retirement :)

 Yes a financial aid professional judgment is what I am curious about and if others here have had to go through that process

Research-Geek

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Re: Retiring while kids in college?
« Reply #17 on: March 04, 2019, 02:12:00 PM »
Thanks so much for taking the time to reply soccerluvof4- I do appreciate it :)

Quote

... No offense but your question is kinda confusing.


I  know the message somehow got meandering with replies and I am sorry if I was not clear enough in how I asked.

but the short version is I am looking for anyone that retired or lost their job and had a huge cut in takehome pay between their child's senior year in HS and junior year in College. In order to learn from them how they handled it.

  I should have added that  I am preferably looking for people that were getting a financial aid package during that time.
« Last Edit: March 04, 2019, 02:40:26 PM by adkdadto4 »

secondcor521

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Re: Retiring while kids in college?
« Reply #18 on: March 04, 2019, 03:02:27 PM »
More stuff, because I'd like to help if I can but it's still a bit unclear what your situation is.  You don't have to share if you don't want to, but it would get you more targeted advice.

As I said, I retired in early 2016 from a high paying job.  My AGI in 2015 was six figures.  My AGI in 2016 was a lot lower.

My oldest son's first part of college was while I was still working.  His first year was covered by a full ride scholarship.  His third semester was paid for by me with money from his 529.  He stopped out at that point as he wasn't happy and wasn't doing very well.  He returned to school last year (summer 2018).  He receives a small Pell grant each semester based on the FAFSA information we filed with my relatively low 2016 AGI.  For 2019/2020 academic year financial aid, he will be over 24 and will therefore file as an independent student - probably not relevant to your case.

My middle son is a senior in high school now and this fall will be going to an out of state private school that uses FAFSA.  They awarded him a pretty nice financial aid package based on the FAFSA we filed 10/2018 based on my AGI in 2017 (which was also low).

My daughter is a junior in high school and next fall plans to attend an in state public university for which she likely will get a full ride academic scholarship, plus possibly a music scholarship, plus an in-state academic grant, plus maybe financial aid if she'll agree to sign a FAFSA (At one point I think she had an objection to filing for FAFSA if we could afford to pay for it without using financial aid.)

...

I have not gone through a professional review or whatever they call it.  I believe the process is straightforward, though, and pretty cut-and-dried.  You tell the school you lost your job and provide proof of that change in financial status, and the school reviews and adjusts your financial aid package for that current school year.

...

You're being unclear about whether or not you are retiring or have actually involuntarily lost your job.  As I tried to outline in my first post, the financial aid office views those two different situations pretty differently.  I would not try to claim you had lost your job if you had in fact retired or resigned.  Financial aid offices are, as I understand it, pretty capable of determining what actually happened and won't look kindly on deception.

Research-Geek

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Re: Retiring while kids in college?
« Reply #19 on: March 04, 2019, 03:59:32 PM »
Thanks for taking the time to detail.

I could retire if not for this college timing, so I plan on keeping working, but if something happened and I lost my job due to a down turn or something I would probably not look for a new one or at least not the same type.. and instead reach out to the schools and try to ask for a review based on new lower AGI...

mm1970

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Re: Retiring while kids in college?
« Reply #20 on: March 04, 2019, 04:15:42 PM »
One of my neighbor's kids got a full ride to Yale.  It wasn't the plan to get a full ride, but his dad got laid off just before.  During the downturn.  I just don't exactly remember when.  I want to say that this "kid" is nearing 30, so we are talking a decade ago when he started at Yale.


secondcor521

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Re: Retiring while kids in college?
« Reply #21 on: March 04, 2019, 06:12:24 PM »
Thanks for taking the time to detail.

I could retire if not for this college timing, so I plan on keeping working, but if something happened and I lost my job due to a down turn or something I would probably not look for a new one or at least not the same type.. and instead reach out to the schools and try to ask for a review based on new lower AGI...

Ah, I see.

The unfortunate thing that you've probably figured out is that between federal income tax, state income tax, job-related expenses (car, clothing, stress relief), ACA subsidies, and financial aid, the net in your pocket of working at a good paying job is probably less than 25 cents on the dollar.

And yet, if you don't have enough to pay for your kids' college and that's a non-negotiable, then you're right - you do have to keep working a while longer.

What I think you can envision is that there is some math and planning you can do such that you can maybe stop working a little sooner:  with your lower AGI you might get enough of an aid package that would mean you wouldn't have to earn that money to cover that cost.  It's a little tricky because you don't know for sure what the schools will do and your kids may not know where they're going to go or how long it will take them to finish, etc.

Maybe once you pencil out some of the math, you can talk to your employer and let them know that you might be willing to volunteer if there is an upcoming downsizing that works timing-wise and income-wise.

historienne

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Re: Retiring while kids in college?
« Reply #22 on: March 06, 2019, 12:07:15 PM »
If you lose your job, you can do a financial aid appeal at most places.  The places I have worked would be likely to give extra financial aid for this reason; it happened to a ton of people in 2008-2010.  I don't know how widespread that is, since it's a discretionary decision, but I think most of the Ivies would be sympathetic and cough up some extra aid.

However - I am much less confident that they would do this if you voluntarily left your job.  That's a different, and less sympathetic, scenario.  You would be asking them to use discretion to override their usual financial aid calculations because you want to work less.  You can try, but if you are honest about it being a voluntary separation, you may get less traction.