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Your Grandkids’ Education and Your Retirement: Can You Fund Both?

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Anyone who has ever flown commercially has heard the instruction: “In the event of a sudden fall in cabin pressure, facemasks will drop down… If you’re traveling with a minor, put your own facemask on first, and then assist the minor…” Did you ever wonder why they say that? It’s because the most important thing for you to do if you want to help someone else in that situation is to make sure that you aren’t suffering from a lack of oxygen. Once you can breathe normally, you can make sure the child next to you is able to do the same.

In a way, funding your retirement is similar. One of the best things you can do for your children and grandchildren is to make sure they don’t have to support you in your old age. That means that adequately funding your retirement should be your first priority. It may sound a little selfish at first, but when you think about all the stresses and strains that are put on a family by caring for aging parents who have no resources of their own, it is really one of the most unselfish things you can do.

That said, there are some actions you can take now that can be a huge help for making sure the next generations get the education they need to be successful. Let’s take a look at some ideas for helping pay for grandkids’ college and other educational needs without sacrificing your own chance for a secure, satisfying retirement.

1. Help fund a 529 Plan

Section 529 of the Internal Revenue Code governs “qualified tuition plans.” Parents or grandparents can deposit funds earmarked for future education costs, and the funds grow tax-free. Current tax law permits these accounts to fund expenses related to K–12 private schools, in addition to higher education. Up to $10,000 per year may be withdrawn tax-free from a 529 plan, as long as the withdrawal is for qualified expenses. If you’re already contributing your maximum to an IRA or 401K, consider setting additional funds aside in a 529 plan, perhaps with the co-participation of the student’s parents. Depending on your state of residence, contributions to the plan may even provide you with a tax break.

2. Gift or contribute to a Roth IRA

As long as your grandchild has income equal to your contribution, you can make deposits in a Roth IRA up to the amount of the income earned. So, if your grandchild earned $4,000 last summer mowing lawns (impressive!), you can put up to $4,000 into a Roth IRA in the child’s name. Like your own IRA, the funds accumulate tax-free, and current tax law permits penalty-free withdrawals for purposes like higher education expenses or the purchase of a first home. You can also name a grandchild as the beneficiary of your Roth account, so that upon your passing, the ownership of the account passes to the grandchild without having to be probated with the rest of your estate. This can be a valuable estate planning tool, in addition to providing a financial boost to the beneficiary. Note, however, that under the provisions of the 2019 SECURE Act, a non-spousal beneficiary must spend down the account within ten years of its receipt.

3. Teach your grandkids about investing

This is one of the most overlooked, but most valuable things any of us can do for the next generation. There are plenty of online tools where kids can learn about saving, spending, and even investing, all under their parents’ supervision. Some accounts even allow kids to buy fractional shares of stocks they care about, like Disney, Nintendo, and others. What better way to get kids excited about saving and investing for the future than with a fun, easy-to-use, online app that gives them real-world experience in a safe environment?

If you’ve got questions about funding future education expenses or any other important financial goal, we are here to help you find the answers you need. Click here to get in touch with one of our advisors.

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This page contains links to third-party company websites. By selecting a link, you will be launching a new browser window. These links are provided for informational purposes only and should not be viewed as an endorsement, sponsorship, solicitation or other affiliation with respect to any third parties. We are not making any recommendations or providing any advice on securities in particular or investments in general. Neither Mathis Wealth Management nor United Planners Financial Services have reviewed the content of, and are not responsible for, the information or the results of the third-party websites.

Meet Cameron Mathis

Cameron received his BBA in Finance from Northern Arizona University, where he also completed the certification program in Investments. 

As a licensed Accident, Health, and Life Insurance agent, Cameron serves our clients as an Insurance Specialist while also working toward the credentials necessary to become an Investment Advisor Representative. 

Best of all, Cameron shares our rock-solid commitment to placing the best interests of our clients ahead of every other consideration. 

Meet Paula Adams

A licensed Life and Health Insurance Agent, Paula also works alongside her husband, Phil Adams, helping in an administrative capacity with his clients.  

Honesty and integrity are her most highly esteemed values and she hopes to impart them to all Mathis Wealth clients. Her main goal is for each client to truly feel valued and respected.

Paula has been happily married to Phil for 33 years and together they have three children—Austin, Nate and Nicole.  She loves her dogs, Bo and Bella, and enjoys working out, reading, hiking, camping and spending any time she can with her family and friends.

Paula Adams Headshot

Meet Vickie Gray

Vickie brings a wealth of experience in business to Mathis Wealth Management.

At Mathis Wealth, Vickie schedules Larry’s appointments and processes accounts forms and other paperwork.

While she grew up in Florida, she moved from New York to Arizona with her husband of 30 years, Gary. They currently have two dogs, Jasper and Yogi, as well as one grown daughter. Vickie’s leisure activities include target shooting, reading and jewelry making.

Vickie Gray

Meet Jennifer Panicker

Jennifer’s role is to help make sure everything goes smoothly for our clients.

Jennifer graduated summa cum laude from the University of Wisconsin – Whitewater, with a Bachelor of Business Administration with an emphasis in International Business and a minor in economics.

A native of Wisconsin, Jennifer spent many years in the Chicago suburbs before moving to Arizona. She appreciates no longer having to deal with snow and cold. Her leisure activities include spending time with her husband, Biju, and walking their dog, Petey.

Jennifer Panicker

Meet Phil Adams

Phil joined Mathis Wealth Management in 2016, after a successful career as a firefighter.

Most of his career he spent at downtown stations as part of the high-rise team. The last 5 years, he headed up the high-rise task force in the Special Hazards Unit.  Phil has made it his business to understand the ins and outs of the public safety retirement system. He strongly believes that helping firefighters prepare for retirement and guiding them through the city’s sometimes complicated retirement process is his true calling. Phil enjoys teaching and coaching members on how best to take advantage of the excellent benefits provided by the Phoenix Fire Department. 

Phil also has over 20 years of experience in business; he was the CEO and President of Stoneridge Construction for 15 years and CEO and President of Stoneridge Development for over 19 years. He was a founding board member and served as president of the Phoenix Metro Public Safety Football Club, which was the 501(c)(3) non-profit organization behind the football team for Phoenix Fire and Police, the Thunder. That football team won multiple national titles and gave thousands of dollars to charity. He even found the time to coach high school football for 20+ years. The skills he learned from business and coaching are directly applied to the retirement planning, business consulting, and wealth management that he does with his clients.

Phil married his high school sweetheart, Paula, while they were at Northern Arizona University and they have been married for 33 years. They have three adult children, Austin, Nate, and Nicole, and two dogs, Bo and Bella.

Phil is a voracious reader, a huge football fan, and loves to travel, fish, and hike.

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Phil Adams

Meet Larry mathis

Larry is the author of Mom Was Right: Family Tragedy to Financial Freedom—How a Widowed Mother of Seven Retired Debt-Free. He has spoken for numerous organizations, including the Third Annual Invest in Women Conference, the American Association of Orthodontists, and the Arizona School of Dentistry and Oral Health at A. T. Still University.

Larry founded Mathis Wealth Management intent upon providing retirees and pre-retirees with comprehensive financial services based on each client’s unique hopes, needs and values. His comprehensive approach enables him to customize strategies for all aspects of a client’s financial life and weave the strategies into an integrated plan so all aspects work together efficiently.

A financial professional since 1987, Larry has the kind of in-depth knowledge that comes from over 30 years of experience. His credentials include a Bachelor of Science in AgriBusiness from Arizona State University and the elite designation of CERTIFIED FINANCIAL PLANNER™ professional (CFP®), which trained him to help clients with virtually all of their financial needs. As an Accredited Investment Fiduciary (AIF®), he has a fiduciary responsibility to work strictly in his clients’ best interests.

Larry is a native of Phoenix, and has served the community on the boards of various charitable and religious organizations. He coached youth sports for many years and is still a certified Little League umpire, having officiated in Cooperstown, New York: home of the National Baseball Hall of Fame. He and his wife, Rhonda, have been married for 35 years and have three sons. His leisure activities include hunting, fishing, and singing, and he especially loves horses and riding.

CERTIFIED FINANCIAL PLANNER®
Accredited Investment Fiduciary®