From the desk of Peter Blatt
In my last Blatt Watch, you read about my clients that were going to keep a promise of paying for college for 5 grandchildren. Paying for college is one of the biggest expenses for parents and/or grandparents. With a sound financial plan, it doesn’t have to impede your retirement.
I also mentioned that this was the subject of an interview I did for The Wall Street Journal. The article titled “Preserving the Grandparents’ Retirement” was published on Tuesday, July 16th. Here is an excerpt from that article written by Zach Anchors:
Every grandparent likes to spoil their grandkids from time to time.
But being overly generous spelled trouble for a retired couple who sought advice from adviser Peter Blatt last year. Their top financial goal was to cover college costs for each of their five grandchildren.
“They wanted to instill in their grandchildren the power of education,” says Mr. Blatt, an estate planning attorney and financial adviser who owns Blatt Financial Group in Palm Beach Gardens, Fla., providing financial-planning services for 150 clients. “Rather than giving them money or an inheritance, they wanted to give them education.”
The grandparents realized that their retirement savings were at risk, but felt they couldn’t back out of their commitment. The children had grown up expecting their grandparents to pay for college and they hadn’t saved money for college or planned to compete for scholarships and financial aid. Moreover, the couple was determined to treat all five grandchildren equally, and they had already paid the oldest’s college tuition.
Mr. Blatt’s first step was to lay out the full implications of the situation. He ran a computer model to demonstrate that paying college tuition for all five grandchildren likely would cause the couple to exhaust their savings by the time they were both 80.
Mr. Blatt also explained that their current investment strategy–crafted by their previous financial planner–was overly risky. Much of their retirement savings, was invested in high-fee equity mutual funds. Based on that asset allocation, Mr. Blatt presented another scenario in which a market downturn depleted their retirement savings even faster.
To read the full article, click here.
If you are planning on paying for your children or grandchildren’s college education, call me to discuss the options so you still have a comfortable retirement.
Until next time,
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