<p>I’ll be 63 when my child is a freshman . My income , being self employed in this economy , is way down the last couple of years . Will it help or hurt to label myself as semi -retired , as I am working less hours ? I do not collect SS yet .</p>
<p>If you are not retired, I would say don’t put it down. The FAFSA calculation considers the age of the parent closest to retirement in the calculation (I think). Any income you have will be counted as income regardless of whether you are retired…or not.</p>
<p>I don’t think the “label” means anything. Retired, semi-retired, employed…what difference does it make? A semi-retired person or retired person can have a higher income than a fully employed person. The FA calculations won’t care.</p>
<p>It’s like the words “single mom”. Some think that connotes “low income”, but it often doesn’t. There are single moms earning 6 and 7 figure incomes. </p>
<p>As Thumper says, your AGE will influence the calculation. I think the older you are, the larger the “allowance” is for savings (not income, I don’t think)</p>
<p>Frankly, you’re not semi-retired. You’re only earning less because of the economy, not by choice. If next month the economy started booming, you wouldn’t close up shop…you’d take advantage and earn more.</p>
<p>It won’t make the slightest bit of difference whether you put retired, semi retired, or anything else. Your income and assets are what matter. Your age is used to calculate asset protection allowances.</p>
<p>what about an IRA</p>
<p>For FAFSA the balance in an IRA is not a reportable asset. Current year contributions to an IRA are still reported as part of income. Disbursements from an IRA are also income.</p>
<p>The label means nothing. My brother’s been retired from the military since he was in his 40s.</p>
<p>Annual contributions to IRAs or any other retirement accts are added back in as income. The assumption is that those annual contributions are optional, and could be used towards college costs. </p>
<p>I know that that may seem harsh considering your age, but the bottom line is that colleges consider the FAMILY as first in line to pay for college. </p>
<p>The truth is that most colleges do not have much aid to give. A family can have a very low EFC and yet only get a $5500 student loan, a very small Pell Grant and that’s it…even though the school may cost $35k per year. </p>
<p>If you’re concerned that your child may not get enough aid, or that your “family contribution” wil be higher than what you can afford, then be sure to have your child apply to a few schools that will give your child HUGE merit for stats…those can be “back up” schools. </p>
<p>Keep in mind that nearly ALL schools include full student loans and possibly work-study in their FA packages to go towards “need”, so your child won’t be able to take out student loans to go towards “family contribution”. And if given work-study, may not be able to work a second job during the school year to earn money.</p>
<p>Also…many CSS Profile schools have a “student contribution” as well. That is often a couple thousand dollars that the student is expected to earn during the summer to use for college costs.</p>
<p>Since you’re married and “older”, I think your asset protection is around $50k…that includes home equity. So, if you have $100k in home equity, and you have $200k in non-retirement savings/stocks/properties, then $250k of your assets will be considered to be used towards “family contribution”…usually around 6% each year.</p>
<p>
The primary home, like retirement accounts, is not a reportable asset for FAFSA at all, so is 100% protected (for FAFSA - for CSS I believe it will depend on the school).</p>
<p>The asset protection allowance is for reportable assets such as savings, stocks , real estate other than the primary home. For a married couple where the older is 63, the current asset protection is @ $67,000 currently. (it changes every year - actually dropped this year)</p>
<p>Any unprotected assets over the protected allowances add about 5.6% of their value to the EFC (unless the family qualifies for simplified needs).</p>
<p>^true about FAFSA and home equity…I had CSS Profile on the brain, since in his other thread, the subject about business deductions and CSS were being discussed.</p>