Tuesday, March 25, 2008

Retirement v. College--No Easy Ways Out

Money Magazine profiles the Wilkes family of Danville, California in the current issue.

With three children, ages 13 to 17, all of them college material, the Wilkes will be looking at retirement just as the youngest child finishes his higher education. Bruce Wilkes, age 52, supports the family and stay-at-home mom, Lorri, age 48, on $100,000 a year. Given the pricey Bay Area locale, that's not a lot of income. On the other hand, that same locale means that they now have significant equity in their home, notwithstanding the leveling-out of housing prices in California. The Wilkes owe $144,000 on a house valued at 1.2 million.

What I found interesting was how the Wilkes seem to have done everything right, financially. They have over $500,000 in retirement funds and regularly contribute an additional $600 a month. They have put aside funds (apparently around $16,000 per child) for their children's higher education. They intend that their children pay at least half of their own college costs. Their children appear to be headed to state institutions.

Still, there's no cheap and easy solution to their looming budget crisis.

The advice given looked pretty good to me. Though I did wonder why no one suggested the obvious boost to the Wilkes' income that would come if Lorri would get even a part-time job.


MEG said...

I agree that in theory she should consider working if they're going to have a budget crunch. Of course once you've gone 5 decades without a job (I'm assuming she's never worked, though that could be off base), the idea of getting one can seem justifiably intimidating and unnecessary.

If they made it through the tough years (several young kids, much smaller income) and managed to do as well as they have, I doubt they consider their predicament worthy of such drastic lifestyle overhaul. I bet they'd sooner move to a lower cost of living area where their savings would go farther.

Anonymous said...

"...the Wilkes seem to have done everything right financially."

Not exactly. They had more children than they can afford.

Couldn't their children just work their own way through college? Then they won't have to support Mom and Dad in a few years. Plus, a college degree means so much more when one really earns it, right?

Living Almost Large said...

Actually working full time when her children are already so old would pretty much pay for college. I bet she could bring in $30k in CA working 40 hours a week even doing secretarial stuff.

So that after taxes would be enough to fund college for each kid. But she proably doesn't want to work.

Sharon said...

Financially, they appear to be doing just fine. They have at least another 15 years for retirement, and they can always sell their home and buy another one outright in a less expensive area. I'm impressed. They are alot further along financially than I am!