When your salary stops in retirement, will you have enough to pay your bills, travel, and live the lifestyle you want in your Golden Years? Sure, you may be one of the lucky ones with a pension. Social Security may still exist. But if you want to live your retirement vision, then it’s important to save and invest properly. And how you pay for your children’s college will affect your own retirement. Think about this: College tuition, books, fees, and housing continue to rise at a faster rate than inflation overall. Based on current trends, the cost of sending just two kids to a private or elite college for a total of eight years will cost more than $ 360,000 if paid after taxes. This means that those in the 28 percent tax bracket must earn more than $ 500,000 to cover cash flow costs. Regardless of where you send your kids to school, the bottom line is this: How you pay for college affects how much you save for retirement. For every dollar you save on college costs, it means more to your personal retirement in the future.

There are a number of strategies you can use to improve your chances of a better retirement and a solid education at a lower personal cost. There are more than thirteen strategies for increasing needs-based assistance. There are at least a dozen ways to cut costs that any family can use to improve their bottom line. Ultimately, it depends on how well you know how to use the IRS code to your advantage to reduce your own expected family contribution (or EFC in financial aid language). Regardless of whether you hope to qualify for needs-based assistance or not, here are some examples of cost reduction strategies available to you.

Strategy 1: Earn College Credit Through Exams By taking Advanced Placement exams or even a “challenge” exam for core college courses, a student can finish school faster, which could save thousands of dollars in tuition and fees. Opportunities for Advanced Placement (AP), College Level Examination Program (CLEP) or DSST exams are available for 37 different courses. For more information on these, see CollegeBoard or search for “Earn College Credit.”

Strategy 2: Stay local Tuition and state fees at a public higher education institution is a steal compared to elites and even crossing the border to go to another state’s public university. If you are considering crossing the border or leaving, consider having your child take up residence in that state. Find out what the residency requirements are in advance by contacting the admissions office.

Strategy 3: Get the credit you deserve from the IRS Use the Hope Education Credit, renamed the “American Opportunity Tax Credit.” This was recently increased to $ 2,500 (from $ 1,200) and now applies to all four years of college, not just the first two. Also, forty percent of the credit is now repayable. Other help comes in the form of the Lifetime Learning Credit, which is available to a family member and allows you to take up to a 40% credit on educational expenses up to $ 10,000. Income limits apply, so be sure to consult a qualified tax professional or visit the IRS website.

Strategy 4: Employ Your Child If you own a business, work as an independent contractor, or own rental real estate, consider hiring your son to work for you. Your child may be able to provide administrative support or help with marketing or real estate tasks. By hiring and paying a child, you will reduce your own personal taxable income through a business expense deduction and provide income for your child. Additionally, the child can use the earnings to open a Roth IRA, a tax-favored retirement account that is not evaluated as an asset for financial aid purposes. And if necessary, a child can withdraw a portion of the earnings to pay for qualified educational expenses. Certain time limits and restrictions apply.

Strategy 5: Establish a Section 127 Educational Assistance Plan As a business owner, you can establish a Section 127 employer-paid tuition benefit program for your employees. This plan allows the business owner to pay up to $ 5,250 per year to employees (including employed children) as a qualified tax deductible expense. This can be used for undergraduate and graduate study programs. Assuming Junior was going to work in the family business for the summer and throughout the year, Junior can earn a salary (deductible expense for the business) that he can use for his own support and Roth IRA contribution (which may be eligible to pay expenses education) and earn a tuition benefit (another deductible business expense). If you were going to give the money to the child anyway, you can also structure it to be tax deductible. Consider this: There are over 110 different strategies that you should consider. All the more reason to have a coordinated plan by speaking with a professional advisor who can help you evaluate these options with you. Food for thought:

• Encourage your preteen to open a Roth IRA with earnings from his paper route or other jobs.
• Consider hiring your son to work on your business or to help you with tasks related to your investment property.
• Use a CollegeSure CD issued by an FDIC insured bank to accumulate savings
• Consider using a fixed income annuity to retain some of your money for college and avoid the potential loss of principal that can occur with a 529 plan invested in mutual funds.
• Look for private and merit-based scholarships (for more information on some of these options, see Fast Web, CollegBoard and the Scholarship Experts, or Scholarship Coach on the web.