As you get closer to retirement, do you know what you’re going to do with all your free time? It’s a question you need to start thinking about. After all, you’ll need to fill the 40 or more hours per week that were once occupied by work.
Unfortunately, even the most seemingly exciting activity can get boring and monotonous after a while. So, how can you mix it up and add another layer of meaningful experiences to your life in retirement? With a little help from a 529 plan – yes, the same type of plan that most families use for college expenses.
What’s a 529 plan?
A 529 plan is a tax-advantaged account in which contributions grow tax-free, and when you take out money for qualified education expenses, withdrawals are also tax-free. While this type of account is usually used for college expenses, it’s not restricted to only that kind of ‘education.’
Not just for college-bound kids
In fact, money in a 529 plan can be used for any sort of classes in which you get credit or earn a technical program certificate (note: the institution also must be recognized as ‘eligible’ by the Department of Education).
For instance, aspiring to learn about graphic design? Most U.S. community colleges qualify as eligible institutions, such as Great Oaks Institute of Technology in Sharonville and Gateway Community College in Covington. Thinking about becoming a chef? A few of the famous Le Cordon Bleu culinary school locations qualify. Dreaming of taking golf lessons in California? Two institutions qualify. Want to be able to ski the Swiss Alps as you study French? Franklin College Switzerland qualifies. Pretty cool!
For a list of all schools currently considered eligible, download this Excel spreadsheet from the Department of Education.
The beneficiary benefit
You can open a 529 plan in your name, or, get this: the beneficiary on a 529 plan can usually be changed one time per year without penalty. So, for example, if your son didn’t use all the money in his 529 plan for college, you can change the beneficiary to you.
This way, the money doesn’t go to waste, and you have a chance to expand your educational horizons in retirement. (As always, consult with a trusted financial advisor or tax professional before moving forward with a financial decision like this.)
The Simply Money Point
Your quality of life in retirement is about more than just the financial numbers; you also need to make sure you have a plan for how you’ll spend your time. And if learning a new skill is something you might be interested in experiencing, a 529 plan can be a smart, tax-advantaged way to pay for the costs.
To educate yourself further about planning for retirement, our Retirement Resources library offers free downloadable guides as well as video tutorials – such as, “7 Personal Decision Points.”