Does high % of income deferral effect EFC under CSS/ PROFILE

blossom
Fri, 30 Nov 2018 17:18:03 +0000

Financial gymnastics- tax planning, estate planning, retirement planning- all important tools to a healthy financial lifestyle. It’s when you make dumb decisions (annuities when they are inappropriate for your age and other considerations; single premium life insurance, moving assets around to random family members to shield them from having to be listed on Profile or FAFSA, titling property in the name of someone who in no way should have ownership of your primary residence, etc.) that people get into trouble. I have seen people make $50K mistakes for the sake of an extra 2K in financial aid. I have seen people take losses when they have no gains to offset them, and don’t need the cash, except “I need to get my Exxon shares off my balance sheet”. Then they have cash- which they use to buy stuff they don’t need.

And the worst (in my opinion, only because it’s somewhat irrevocable)- retiring from a job you like and are good at, to reduce your income and start collecting social security as soon as you are eligible because your kid will get more aid.

College lasts for four years. If you retire in your mid sixties, you may need to support yourself for another 30 years. It won’t take long for you to wish you still had your nice paying job, and that you could defer your social security which leads to higher monthly payments (for as long as you live).

Educate yourself, sure. But being shortsighted about how much aid your kid will get when he gets into Harvard is betting a LOT of your financial future for on the slim chance that it pays out for you.