2020-10-18 08:06

How Covid-19 Has Changed the Way People Should Save for College WrN世界播



Reducing equity exposure and increasing cash in a college-savings plan at this point may be both timely and comforting, says financial adviser Jeffrey Swett. WrN世界播

财务顾问杰弗里·斯威特(Jeffrey Swett)说,在这一点上,减少股票敞口并在大学储蓄计划中增加现金可能既及时又令人欣慰WrN世界播

The pandemic has drastically affected the finances of many families, making saving for college more challenging. WrN世界播


Uncertainty about job stability, fluctuating markets and how long the pandemic will last are putting added pressure on parents whose children are approaching college age. And some traditional ideas about college savings are being challenged, such as the desirability of saving for a name-brand school when so many are currently online-only or are holding only limited on-campus classes. WrN世界播


With these issues top of mind for many families, The Wall Street Journal invited three experts to discuss college financial planning: Dan Hill, president and chief executive of Hill Wealth Strategies in Richmond, Va.; Nicole Strbich, director of financial planning at Buckingham Advisors in Columbus, Ohio; and Jeffrey Swett, financial adviser and senior portfolio manager at UBS and leader of the Swett Wealth Management Group in Boston. WrN世界播

鉴于这些问题是许多家庭最关心的问题,《华尔街日报》邀请了三位专家来讨论大学财务规划:弗吉尼亚州里士满Hill Wealth Strategy总裁兼首席执行官丹·希尔(Dan Hill);俄亥俄州哥伦布市白金汉顾问公司(Buckingham Advisors)财务规划总监妮可·斯特比奇(Nicole Strbich);以及瑞银(UBS)财务顾问兼高级投资组合经理、波士顿斯威特财富管理集团(Swett Wealth Management Group)负责人杰弗里·斯威特(Jeffrey Swett)。WrN世界播

Here are edited excerpts of the discussion. WrN世界播


WSJ:What specifically are you telling parents to do differently now in terms of saving for college because of the pandemic? WrN世界播


MS. STRBICH: We are advising parents to keep more of their savings liquid. This could mean not committing to a 529 plan or investing in potentially volatile equities in the event that the money may be needed due to a job loss or income reduction instead. They can look to borrow funds for tuition when the time comes or use the cash that they have been saving. Though there is the potential to miss out on investment growth in this circumstance, you are avoiding volatility and potential loss on funds that you may need in the short term. WrN世界播


MR. SWETT: Due to the uncertainty caused by the pandemic, parents may find it helpful both financially and emotionally to carry a higher cash balance than usual. Keeping some equity exposure in a college-savings plan until withdrawal is typical, but reducing that equity exposure and increasing cash at this point may be both timely and comforting. This can be particularly helpful for parents with high-school kids who will be writing tuition checks within the next couple of years. WrN世界播


MR. HILL: I’ve been speaking more to my clients about other options that may make more sense right now, such as volunteering in a gap year or studying at home and taking classes online while attending a local community or university program. I also continue to reaffirm to my clients to continue to save. If those savings aren’t formally applied to tuition, then they can be applied for new supplies including a tablet or transportation, should their child choose to work or volunteer outside of the home. WrN世界播


WSJ:What are you advising people who have children nearing college about continuing to contribute to a 529 plan, given the uncertainty in the market and possibly their finances? WrN世界播


MS. STRBICH: For students who will be using their 529 accounts in the near term, the growth potential on any new deposits is low since they are invested more conservatively due to the short-term goals, so it may not be worth making a contribution now. In this situation, if you are in a state that provides a tax deduction for contributions, consider delaying the deposit into the 529 account until you know the funds will be available for college expenses. Then deposit the funds into the 529 account and turn around and take a distribution to pay tuition. There is no benefit of tax-free growth, but you retained control and use of your funds during uncertain times and then get a state tax benefit for the 529 contribution. WrN世界播


MR. HILL: I advise them that it is still a good idea to save in a dedicated 529 savings plan. This is important to do because if the child closest to college age doesn’t use it for college, it can still be used for their other educational goals, including professional development. If they don’t use it at all, then it can be passed on and applied to another person’s education. WrN世界播


WSJ:For many parents with children nearing college age, their 529s may be essentially parked in low-risk investments. What should they do now if they see that they are falling short of the money they are going to need? WrN世界播


MR. HILL: Consider increasing your own contributions, if you are able. If you increase the risk, it can lead to the possibility of losing more of your money. Another great thing about 529s is that family can also contribute to your child’s plan. If you’re falling short, consider asking family members to contribute to the plan for birthdays, holidays and graduation. WrN世界播


MS. STRBICH: We’re also advising parents to start preparing a plan for how they will handle these costs by completing a Fafsa estimate, understanding expected tuition cost, and looking for scholarship and award opportunities. WrN世界播


WSJ:What other college-savings recommendations are you offering parents amid the current environment? WrN世界播


MS. STRBICH: We advise clients to allocate savings for education between 529 accounts, investment accounts in their name and Roth IRAs, if you are eligible to contribute. This approach allows savers to take advantage of the tax savings offered in 529s and to retain flexibility of the assets in the Roth IRAs and investment accounts to help you if life throws you a curveball. WrN世界播

我们建议客户在529个账户、他们名下的投资账户和Roth IRA之间分配教育储蓄,如果你有资格捐款的话。这种方法允许储户利用529提供的税收节省,并保留Roth IRA和投资账户中资产的灵活性,以便在生活向你抛出曲线球时帮助你。WrN世界播

MR. SWETT: For parents who are interested in longer-term saving for college, it may be worthwhile to consider investing in defensive sectors such as health care, consumer staples and utilities. Those sectors tend to pay dividends and may hold their values more effectively in difficult economies. Additionally, this exposure can be attained within formalized college plans or in traditional brokerage accounts for those who prefer a less formalized strategy. WrN世界播


WSJ:We’ve heard that utilizing a Roth IRA more often for college savings could be a good idea. Is this a good option in this environment vs. a 529, and why or why not? WrN世界播

“华尔街日报”:我们听说,更多地利用罗斯个人退休帐户(Roth IRA)来存钱可能是个好主意。在这种环境下,与529相比,这是一个好的选择吗?为什么不是呢?WrN世界播

MS. STRBICH: For funds that are certain to be used for education, a 529 account still has more tax advantages, especially if you live in a state with a tax deduction for 529-account contributions. If you may not need the funds for college tuition, or you could have a job change that may require you to access some of these funds, a Roth IRA would be the better choice, as you can always access your contributions penalty-free. WrN世界播


MR. HILL: One major downside to utilizing a Roth IRA in order to save more for your child’s future education is that there are tax implications on the earnings that are withdrawn prior to age 59 and/or if you’ve had it for less than five years. One advantage of using a Roth IRA would be your ability to use the funds for your retirement, should your child get financial assistance elsewhere or decide not to use it at all. WrN世界播

希尔:使用罗斯个人退休帐户(Roth IRA)来为孩子未来的教育存更多钱的一个主要缺点是,在59岁半之前提取的收入和/或如果你使用它的时间不到5年,就会受到税收的影响。使用Roth IRA的一个好处是,如果您的孩子在其他地方获得经济援助或决定根本不使用它,您就有能力将这些资金用于退休。WrN世界播

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