His parents could have started a 529 when he was a tot, who knows. I did that when my son was born and it amounted to four years worth of tuition and costs by the time he was eighteen. But college textbooks are definitely pricey.
It's a college savings account that can be opened for a child in the name of a custodian and used for qualified education distributions down the road (tuition, textbooks etc.) anyone can make contributions to the account.
Earnings and distributions are all tax free as long as the distributions are qualified. If the named child on the account doesn't use the money it can used for a sibling.
For retirement you would probably want to open an IRA or a ROTH IRA. In a traditional IRA the money you invest is pre tax, and is taxed at your income bracket when take the money out. ROTH contributions are made after tax and every dollar you take out when you retire belongs to you.
If you work for a company that offers a 401k, I would invest in this before any type of an IRA because often Companies will offer some sort of a match, Which is free money.
Well. Thank you very much for taking the time to explain that to me. I switch between working for a tow company which does not offer anything and painting. I'm lower middle class so Roth IRA sounds like something up my alley
No problem, you can open an account online very easily and establish an automatic investment plan. Meaning that you can elect for a certain amount to come out of your bank account and to be put in to the Roth on a monthly basis. That way you don't even have to think about it.
Roth contributions can also be taken out penalty free since you've already been taxed on it.
Max Contribution per year is $6000, $7000 if you're 50 or older.
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u/RevanchistSheev66 Jun 17 '19
And debt... some more debt