Welcome to Something More with Chris Boyd. Chris Boyd is a certified financial planner practitioner and senior vice president and financial advisor at Wealth Enhancement Group, one of the nation's largest registered investment advisors. We call it Something More because we'd like to talk not only about those important dollar and cents issues, but also the quality of life issues that make the money matters matter.
Here he is, your fulfillment facilitator, your partner in prosperity, advising clients on Cape Cod and across the country. Here's your host, Jay Christopher Boyd. Hello and welcome to another edition of Something More with Chris Boyd. My name is Jeff Perry. Chris Boyd is at a conference this week. So Russ Ball, my co-host today, and I have the privilege of sitting in for him. How are you doing, Russ? Pretty good, Jeff, pretty good. Enjoying the spring weather out here on the Cape? How about you?
We were back on Cape Cod last weekend for Mother's Day to celebrate with some friends and family. And half the weekend reminded me why I moved and the other half of the weekend reminded me, hey, this is nice sometimes. Yeah, yeah, it's definitely becoming that time of year. So just in time for Memorial Day. It's a beautiful time when that weather breaks and you feel the sunshine again and the warm weather and the ocean breeze. And Cape Cod's a beautiful place from mid -May to October.
Yeah, yeah, this is my first winter getting through it up here. And it was definitely an experience. So it feels even more glorious when the leaves start going out on the trees and life feels really good again. Well, speaking of different places, you just returned from Minnesota. You were at a conference for the Wealth Enhancement Group. Tell our listeners what you did there. Yeah, so I was out there from Tuesday to Thursday. We had a next-gen conference, excuse me.
And just getting to know the company, getting to know leadership, getting to see the Wealth Enhancement offices, all that was really great. And probably most of all, just meeting other advisors from across the country. I met folks from Texas, California, Florida, New Jersey, you name it. So I think there were about 75 advisors from across the country that came from different Wealth Enhancement teams.
Just doing some idea sharing and talking about what their practices are doing and how they're helping their clients. So it was a really beneficial, really great experience and good to finally have that actual connection with Wealth Enhancement on the corporate side. So really successful trip, I'd say.
Well, when we transitioned over to Wealth Enhancement, oh, about a year and a half ago, that was one of the primary reasons that we decided that Chris Boyd and Kristen decided to join Wealth Enhancement Group because of the resources and the connections to other people in it. It comes up, I won't say every day, but frequently where we have a unique thing that we've never seen before in a client. Every client is unique. And Chris and Kristen have certainly seen practically everything.
But sometimes you get something that's a little odd or a little narrow that you haven't dealt with and having all the resources across the country with experts in practically every field. Even a couple of weeks ago, we did a podcast with an advisor from the DC area who is a specialist because he's built a practice being specialist on benefits of federal employees, like something that we on Cape Cod typically don't deal with.
We don't have a lot of federal employees on Cape Cod and it's good to have someone like him or whatever the issue is, right? So making those connections. Next gen, I guess you're the next generation, Russ. I guess so. I guess so. But to your point, I think the other thing I like about Wealth Enhancement broadly is just everyone's so willing to help and be a resource.
I think not just on the corporate side, but other teams, we have these email groups that we're talking to other advisors about different ideas and doing that idea sharing and everyone's always so responsive and ready to jump on and help out. So I think that's a really useful part of the Wealth Enhancement infrastructure. I agree. It doesn't feel corporate.
It feels still like a team, like a smaller environment because you're only dealing with certain individuals or certain teams on any given subject. It's not the corporate structure that's weighing you down and filling out forms all day or whatever the case might be. Exactly. Well, speaking of next generations, I think it's the perfect segue. I'm going to a graduation, my granddaughter's graduation party coming back in Massachusetts for the first weekend, the second weekend of June.
So speaking of next generations, right? And so there's high school students all over the state, country, graduating and deciding what to do next job, entering the job force, going in the military, going to college, trade schools, whatever it is. And there's just as many probably, or a few less, obviously, who are graduating from college and going to grad school, going into the workforce.
So in the spirit of all this changes that is going on, I think it's good to talk about during this episode is to cover some of the basics of college planning. Our family has done a lot of college planning in the last year, because Faith, the granddaughter I mentioned, has decided where to go. And she went through all the school visits and everything. And it's a lot, but it really doesn't start there. I mean, a lot of families start there like, oh, wow, my child's graduating.
We gotta make a plan. Right, right. Ideally, we'd love people to start at the beginning, meaning a child is born, right? And I looked up the data. For a child born in 2025, it's projected that the cost of a undergrad, four-year degree, at a public university in 18 years will be $182,000. And the average cost is projected to be at a private school is $234,000. Yeah. We always have clients saying, what's my number? Usually they're talking about retirement, right? What's my number?
What do I need to retire? Well, that's your number for a new parent, right? And on top of all the other changes that you're going through, especially if it's the first child. Right. It's like, oh, I guess I should think about this child, this little baby, this seven pound person that's gonna be someday. And we'd like them to go to college and build a profession and life, right?
And so I think that's, when someone has a child, I think that's, at least on the mind, a lot of people don't take action because they're overwhelmed. But I think that's like a driving force to say, okay, we've got to be responsible. Maybe we should save for college. Yeah. Yeah, absolutely. And I think, like you said, the sooner you start, the more of a leg up you have on saving those big amounts of dollars that are needed. So you can reverse engineer this. People like to do math.
Some people, some don't. But you can have a number that you're shooting for, $200,000 roughly over 18 years, and you can do the math. We help clients with this all the time. We do 529s for our clients who are in need. And you can actually say, how much do I need to save with a projected return and come up with a formula that shows how much you need to save a month or whatever the frequency is to have a good shot of reaching this goal. And so that's kind of simple. But you know what?
I've done that with countless people. What I see happen is you give them the number and it's like, oh, we can't afford that. Like, you know, we're new. This baby's gonna cost us money. Who knows? Diapers are expensive. Somebody, you know, one of the spouses can't work as much, you know, whatever the situation is, right? And so that causes many people to do nothing, right? They say, oh, I can't afford $500 a month, which is, you know, a lot of money for a young couple in our hypothetical here.
But I want to encourage people to do something because, you know, you can do it gradually. It's just like saving for retirement. You have a goal. It's probably more than 18 years away if you're just starting but you have a goal and you might just put in the minimum when you start your first 401k or whatever savings plan you have, retirement plan. And you don't put in that 10 or 15% that we might recommend but you just do something to get the match.
And I would just encourage young people who are starting out and maybe just had a baby or maybe the child's five years old and you haven't done something is to do something. And generally, there's different ways to save.
You know, some states have these prepaid college plans, which in my opinion, a little bit restrictive to think that I'm in Florida, to think that if I have a saving for someone that, you know, in 18 years they're definitely gonna wanna go to FSU or, you know, University of Florida or wherever.
I think the best way, and I'd love to get your input, is the standard 529 account invested for a young child, invested in the S&P 500, just a broad-based exposure to equities and just dollar cost average, whatever you can afford, review it every year and say, you know, can I afford another $50 this year, right? Yeah, definitely.
I think the, like you said, the flexibility of the 529 is probably one of the best traits other than the, you know, tax efficiency of a 529, which is also amazing, but just having the option.
So let's say you have a kid and you're saving from the day they're born, you're saving for their college and then they decide, well, actually, I don't wanna go to college and, you know, it might not be ideal for the parent if that's what they envision them doing, but you can move those savings to another child, you know, in your life. So it's not as restrictive. Very flexible, yeah.
I mean, if I, like, I also looked at the, some of the different options for, that they have in Massachusetts for Massachusetts schools. Again, it's like, well, yeah, you don't know for sure if your kid is gonna go to school in that state and it is a little bit restrictive in that way. So 529, it's relatively simple, it's streamlined and it's very flexible. I had an advisor I used to work with and he said, you know, when his kid was born, he just started putting $50 a month.
Just, it didn't seem like a lot and he just put it in a growth fund and, you know, 17 years later, it's doing pretty well. So, yeah. It is, you know, we don't like the term, set it and forget it. You know, you do wanna monitor it, but a 529 is pretty close to that. Yeah, yeah.
And just consistently, like you said, consistently contributing, even if it's not a huge amount of money, because it does seem like a very daunting number when you hear those college expenses, especially for those private schools. But anything is better than nothing, just like retirement savings and just getting that money invested early. Time is on your side. If you start when the kid is a newborn, so definitely a great way to start preparing for those expenses down the road.
Yeah. So, you know, we're talking like we know what a 529 is because we work with them. We assist clients with opening them and managing them. But for the person listening to the podcast who says, what's a 529? I guess we should go back a little bit. I apologize for not doing that. 529 is a tax deferred saving program to save for any type of future education. It's opened by an adult. It could be a parent, could be a grandparent, doesn't have to be related. And they name a beneficiary.
So I'll just, I like to make it personal. So a long time ago, my wife and I opened a 529 as Faith as a beneficiary. And so we put money in every month as we're suggesting you do. You don't have to put in every month. You could front load it. You could put, you have gift tax issues, which is a really somewhat detailed conversation, but to avoid the gift tax, you could put $19,000 in a year or you could fill a form and put more in.
But so you can do like a forward, you can fund it forward or you can do it monthly or you can do it just when you have money. Anybody can contribute to it. So if you opened it for your child or grandchild and someone else wanted to give the child a birthday present and they could contribute to the 529 as well. So the money goes in, it grows, tax deferred. No one's, there's no taxes, no annual tax. It just grows and grows and grows. And then you can use that money, not just for college.
You can use it for high school. For example, if they went to a private high school, if they got some special assistance for their education, maybe they were having some trouble and needed some summer camp, if you will, you could pay for that. If they go to college, you can pay the tuition, room and board, housing, meals out of the 529. If they went to a trade school, if they wanted to learn trade and not go to a traditional college, you can use it to pay for that.
So there's lots of ways you can pay it. The term educational expenses is very broad. The payment comes directly from the 529 to the institution and it's nice and clean. And when you do that for an educational purpose, for that beneficiary, it's tax free. So all the growth that happened over the, in theory, 18 years, however long you had it, you never pay taxes on. So that's a great deal.
So there was a common objection from some parents and grandparents saying, well, I like that idea, but what if my child doesn't go to college, right? So they would say like, I don't know. I don't wanna risk it. I don't wanna, but that's really, that objection has been eliminated, if you will, by some recent acts in Secure 2.0. That's an act that Congress passed.
And now if there's any money left over in a 529 or they don't go to college at all, that money up to $35 ,000 of it, assuming that the child or now adult has earnings can be rolled over into an IRA for the benefit of that child or that person. Or let's say that child doesn't go and, or maybe the child doesn't want the IRA or things aren't well with that child. That child's not in a healthy position. You can change the beneficiaries as you noted.
So if you have another child, or maybe you can actually change it to yourself if you wanted to, but you can rename the beneficiary and as long, as many times as you want. And if that doesn't work for you, you can take the money out and then you pay taxes on that. The government's not gonna let you avoid taxes on that. So it's to your point, super flexible and really the best method. Before the 529, there were a couple other methods that are still out there and available.
They have a lot of limitations and they just don't have the benefits that a 529 has. Yeah, yeah. And I think that new $35,000 Roth rollover is, for those people that are like, well, I'm not sure, it seems like a lot to save. There's that benefit to that. You're also just saving for their future. If they don't use all of the funds, you can still use that for their retirement. And that's a pretty great leg up really early in life to have a $35,000 Roth in the first few years of working life.
That's pretty good deal, so. What a gift that, what a graduation gift that is. Yeah. Those extra money and all. We've paid for your college education and there's $20,000 left for opening a Roth IRA for you. Yeah, yeah. And they might not feel it in the moment in 21 or 22, whatever, but. Oh, they definitely wouldn't. They'd be like, thank you. I can't take that out? Okay, nevermind. Right.
That'll be growing for the rest of their life, so. 35 years later or whatever it is and it's worth a million dollars or something, they're like, wow. Exactly, they'll be thanking their parents then. Yeah. We're joking around and things are funny because they're based in truth, right? So young people, many young people, there's exceptions to this generalized statement, but many young people don't have a good understanding of money when they're graduating high school, right?
And so they, so let's go, let's fast forward. You've saved your money and now you have a graduating student and you're starting that process of choosing your college, right? And gee, it's so common. It's so difficult for a 17 or 18 year old to say, oh, what do I wanna study, right? I mean, let's talk about the basics. What do I wanna study and do for the rest of my life? It's like, it's ridiculous to think that that's gonna work.
Yeah, it's extremely, I mean, at least in my experience and even with some of my friends, it's extremely daunting and scary proposition to be like, all right, now I have to choose right after finishing high school or, you know. How do I know? I have no basis for it, right? Exactly, if you've never been in the workforce, you don't really know what you would like and what you want your career to look like. There are other people like, my best friend's an architect.
I knew he was gonna be architect since we were in like second grade. So there are those types too who are just like, that's just the track and that they know what they wanna do, but not everyone's like that. And choosing a college based on, you know, what you might think you might wanna do is a very difficult thing. Absolutely, so, you know, if you're a young person out there, like we get it.
And if you're a parent or grandparent, give them some grace because think back and think back of all the things that you've done since you graduated high school. And it's probably not that you've worked in one profession based upon your college experience and, you know, always stayed in that profession. Most people jump around or, you know, see something else and say, oh, I'm gonna go back to school or I'm gonna see if my skills transfer.
So not only is the decision of like, what should I study, which should be the first choice of people thinking about college. It's probably not though. No, I love my granddaughter more than I can describe, but she's a runner and her decision on where to go was certainly based somewhat on what she's gonna study. But it was really about running, right? Where does she wanna run? What division does she wanna run in? You know, the whole thing.
So, and then when you get down to money, 18 year olds, you know, maybe they've worked, maybe they haven't, but they really can't put their head around, you know, if the school is gonna cost $100,000 for four years after maybe some federal and state aid and what that means. And you have students like signing these just loan documents, not understanding really what it means or deciding to go to a school because of reasons that have nothing to do with money.
And, you know, family's not wanting to say, we can't afford that or you shouldn't choose that. So it's a difficult time. So it pays to like spend some time planning, like have these discussions with your child, the grandchild, just say child, about the expectations from the family, what they're able to afford and explain what taking out a $100,000 loan over four years is going to mean at the end.
And, you know, come up with an agreed upon budget and then focus your search for colleges based upon that budget. Because it can, the process, if you're not prepared, can really get, can really run away from people. So planning, budgeting, having open conversations. We've had as a guest on the podcast, Russ, I don't know if you've, I think it may have been before you joined our team, but Cozy Whitman of Inside College Track. And she has a service.
She's one of the principals of a service that does consulting with families and, you know, will hold their hand as much as they want or just, you know, answer questions along the way. And it probably pays to at least talk to somebody like that if you haven't gone through this process before, because it's complicated and it's difficult. For sure. And I would imagine having that conversation with a professional, as well as the, you know, graduating child of the child that's looking into colleges.
Because like you said, there's like that financial outlay and signing those loan documents for a 18 year old. It's like, they can't conceptualize what that's gonna mean down the road. And if everyone's, you know, doing the same thing, it's like, oh yeah, like a couple of hundred thousand in student loans, it's no big deal. Yeah, I'll worry about that later. I'm gonna get this job that pays me half a million dollars. Or it might not even be about the job.
I've seen this other too, where it's like, oh, it's a great school, great campus, seem like really nice people. And I'm gonna go follow my passions that might not be the most lucrative after college, you know. So there's a lot of, you know, even when I was looking at colleges, I remember like the campus was a big deal. Like how nice was the campus? And- How nice are the dorms, right? Right, right. And looking back, it's like, who cares? That's not how you should be selected at your college.
But of course, as an 18 year old, it's like, you're basing it off of what you know and what you're interested in, so. Well, if you ever wanna wonder about the college tours, and I, you know, this is my first time helping someone go through that process with visiting schools with faith. It's a sales pitch. I mean, like, so what are they showing you? They didn't show you, they didn't show us too many classrooms.
You know, like, it was a certain dorm, or is the, a lot of time spent on showing you the cafeterias and the meal plans, and the student gym and the, you know, all the clubs and the, you know, the nightlife and the, whatever it is, right? So, I mean, they're putting their, it's competition. These schools are competing for students. So it's, academics is, should be the first reason that people are going, you know, is there a program there that you wanna study? You think you wanna study?
Do they have a good reputation? Are they accredited? All these kinds of, like, basic things. Finances is certainly another big factor. Set expectations, as we talked about. And is this a school that someone can afford? Not everybody can afford $100,000 a year. And do you need it, right? And, but I think, you know, going through the experience and listening to Cozy Whitman a few times, and I think it's important that you do spend some time on fit, though.
Like, so the size of the college, the location, you know, do you wanna live close to home? Do you wanna commute? Is it important that you are in a certain climate? For Faith, she wanted to be in a cooler climate for running. I was hoping she'd come to Florida, but, you know, too hot here for her to run. You know, so where is a good fit for you? And the culture of a university or college, they are different, but that requires some homework and some digging in, there's lots of rating services.
I mean, parents, I think, when they're thinking about the culture of a university or college, they see, is it on the top 10 party list school, right? You know, you're not going there, but, you know. So all these things really matter, and it has to be a deliberate process. And it's one that I think our kids and grandkids do need help with, even if they seem to know what they want, because there's a lot of things that, you know, at 18, you don't have a good understanding of.
Absolutely, yeah, and just to tack on one other thing is when you're visiting the colleges to talk to other students, to talk to, if you can to talk to faculty, let's say there's a program you're interested in, like let's say it's a business school, you can talk to, you can set up appointments even with faculty members, get to know them a little bit, cause those are most likely gonna be your mentors and teachers for the next four years.
So I think that could be useful when you're going to see those colleges, cause it's a big trip too. There's a lot of colleges to visit and they could be all over the place. So you gotta make the most of it and getting to know what other students are talking about and the faculty can definitely make a decision a little bit easier. So we've talked about, you know, the best way that we think to save for educational expenses for a child, the 529.
And if we can help you with any of this, if you need help or suggestions or advice on the right vehicle, doing some financial projections on saving for college, we're happy to do that. We do it for our clients. If we can help you just give our office a call, 508-771-8900. So, you know, that's starting out saving for it. We talked a little bit about the process of choosing the right college and let's just spend a few minutes for us talking about how do you pay for it?
So obviously we hope someone's got a robust 529, right? And, you know, they save so much that they have too much. They're gonna open a Roth later, right? So that's not everybody, right? So I think most people who are in this process have heard of the FAFSA. That's an application, a federal application for student aid that everyone who's applying for colleges fills out and you get back a report depending on the family's income and so forth, some ratios.
And it does matter if the parents have a 529. It doesn't matter if the grandparents have a 529, but we'll put that aside for now. And they give you some federal aid. Some federal aid is available. Obviously the less income, the less wealth the family has, the more federal aid. And that's gonna be the starting point. It's not gonna pay for all of college, certainly. You know, maybe $5,000 might be the median number that people get.
Some people get more, some people get less, but it's certainly not gonna pay for all of college. And then there's grants and gifts from the institutions. So this is all about, you know, kids hear it enough. Kids probably hear it too much. You gotta keep your grades up. You gotta keep your grades up. You gotta get into extracurricular activities for your college application. You gotta get recommendations.
You know, building that college application to hopefully encourage the schools that you're applying to to give you some grants and gifts, right? So, but you really can't depend on that. Those are gonna be depending on where you're going. If you maybe fit into a certain category that they're looking for, you know, a certain major, different majors that they're encouraging students to apply for might have a different grant than if you're in another major.
And then there's other types of scholarships like athletic scholarships and, you know, private scholarships. After that, it's really about two things that you kind of have to make decisions about. One is, can the family outside of the 529 provide a gift to the student that can come from a parent or the grandparent or, you know, anyone who wants to do it, actually. And so that would be one way that you can fund some of the college.
And then it comes down to loans, whether they're federal loans that are subsidized or unsubsidized or private loans or parent loans. And that's where I just wanna spend one part, a couple of minutes before we wrap this up for us is on the loan part. You really have to be thoughtful and diligent and get help. When you receive the grants back, you get a statement, you know, from each school saying how much they're going to give you as a financial aid letter.
And in that, in the financial aid letter, which many people get confused about, Cozy Whitman talked about this when she was on the show, is whatever loans are available to you. And if you're not careful, they almost look like they're gifts. Because they're just on the form with everything else. You know, this is your Pell Grant, this is your athletic scholarship, this is your grant for studying biology or whatever the case might be at our university.
And then there's lines about Stafford loans and all this. And at the bottom, they just, it nets out to a number like, okay, you need $10,000 more. But you've already in that financial aid letter are those lines which already include loans from the federal government that they're willing to give you. So just be thoughtful about it.
And you know, if you need help reviewing the one, work with someone like Cozy Whitman or call your financial advisor and go through them to really parse out what parts are loans and what parts are gifts. And if it's a gift, meaning a grant, are they contingent on you, the student, keeping up a certain grade point average? Is it contingent upon maybe doing some athletic accomplishments, whatever the money came from?
Just so you have a full picture of what the potential costs could be at that given university. And then you have to make the decision. Do you want to go to this school and do you want to take the loans or do you want to look somewhere else? Yeah, I think as you're illustrating, I think it is very complicated, especially if there's a lot of applications involved, a lot of schools that are accepting, they all have different grants, different scholarships, different terms. 100% right.
And so trying to navigate all that and then also deciding, well, which is the best option for me? It's a lot. So I think leaning on those professional resources, talking to your financial advisor is definitely helpful. Our team has seen these before and we can help navigate a little bit. If we need additional help, we can always loop in other folks to give some guidance. So definitely don't feel like you're in it alone. There's definitely a lot that could be helped. That's right.
All those times and the processes are critical. So take your time with it. Get the advice as you said, Russ, and we're happy to be a resource for you. If you have a young child and you haven't started a 529, give us a call. If you have a 529 and you get a little leeway in your budget, maybe it's a good time to up your savings. And if you're a recent upcoming graduate or a recent graduate, congratulations and the world is at your feet.
Well, good conversation, Russ. I hope we helped some people think about this complicated process as we wrap it up today. And thank you for listening. Until next time, keep striving for something more. Thank you for listening to Something More with Chris Boyd. Call us for help, whether it's for financial planning or portfolio management, insurance concerns, or those quality of life issues that make the money matters matter. Whatever's on your mind, visit us at somethingmorewithchrisboyd
.com or call us toll free at 866 -771-8901. Or send us your questions to amr-info at wealthenhancement.com. You're listening to Something More with Chris Boyd Financial Talk Show, Wealth Enhancement Advisory Services and Jay Christopher Boyd provide investment advice on an individual basis to clients only. Proper advice depends on a complete analysis of all facts and circumstances.
The information given on this program is general financial comments and cannot be relied upon as pertaining to your specific situation. Wealth Enhancement Group cannot guarantee that using the information from this show will generate profits or ensure freedom from loss. Listeners should consult their own financial advisors or conduct their own due diligence before making any financial decisions.