529 College Savings Plan Brochure
College OR
?
Retirement
WITH A SOUND STRATEGY, YOU CAN SAVE FOR BOTH
qwer
Create a Strategy That Helps You Save for College AND Retirement College and retirement are two equally important, but completely different goals. Many families make the mistake of viewing their retirement savings as a source to fund a college education without realizing the negative impact this may have until they are closer to retiring. But the good news is that there is a way to save for both at the same time. Just as you make periodic contributions towards your retirement in an IRA or 401(k) plan, saving for a child’s college education can be just as easy and affordable when you open a tax-advantaged 529 college savings plan. So, with a little bit of planning, you could have a good start on funding a college education, potentially reducing the amount you have to borrow from your retirement savings account.
The Coopers
v
Two different approaches to sav THE COOPERS1 The high cost of not saving for college The Coopers are both 35 and have two children, Susan, age 2, and their newborn, Sam. Larry and Jane have saved $75,000 for retirement through a 401(k), and plan on contributing annually over the next 30 years. They also plan to use some of that money to pay for college.
$650,000
When Susan is ready for college, the Coopers will withdraw $25,000 annually to pay for college. In Susan’s third year of college, Sam will start attending the same school. That means Larry and Jane will have to withdraw $50,000 to cover college expenses.
AT YEAR 1, PARENTS ARE 35
By the time both children have graduated, the Coopers will have depleted their retirement account by $200,000. Even with consistent annual contributions, their projected retirement account balance will only be $383,035 by the time they are ready to retire.
CHILD 1 CHILD 2 TURNS TURNS 18 18
PARENTS TURN 65
$650,0
600,0
600,000 550,000
550,0
• Retirement Savings
500,000
500,0
450,0
450,000
Withdrawals are made to pay for college
400,000 350,000
400,0
350,0
300,0
300,000 250,000 200,000 150,000
Retirement savings account has grown to
250,0
$383,036
150,0
200,0
100,000
100,0
50,000
50,0
0
1
2
3
4
5
6
7
8
9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 Year
This chart from OppenheimerFunds, September 2012, is for illustrative purposes only. These hypothetical illustrations do not represent the performance of any specific investment. Investment contributions are based upon an average annual contribution of $5,570 into retirement savings vehicles; growth is determined by a 5% annual rate of return; and withdrawals represent the average cost of a public 4-year university (OppenheimerFunds, September 2012). Systematic investing does not assure a profit and does not protect against loss in declining markets. Before investing, investors should evaluate their long-term financial ability to participate in such a plan.
vs
Are you a Cooper or a Murphy?
the Murphys
ving for college and retirement
ARENTS TURN 65
0 31
THE MURPHYS1 Saving for both college and retirement may pay off The Murphys are also 35 and have two children, Jason, age 2, and Jodie, their newborn. They have also saved $75,000 for retirement through a 401(k), but, unlike the Coopers, the Murphys recog nize the importance of maintaining separate retirement and college savings accounts. They plan to divide their
$650,000
annual contributions between saving for retirement and 529 college s avings plans for their children. When Jodie turns 18, Robert and Rebecca plan to have enough money in their 529 plans to pay for more than two years of college, making it easier to stick with their plan to not withdraw any funds from their
AT YEAR 1, PARENTS ARE 35
CHILD 1 CHILD 2 TURNS TURNS 18 18
retirement account. Once Jodie graduates from college, they will be able to begin increasing the amount they contribute to their retirement account. The Murphys’ plan is designed to reduce the amount they will have to borrow to pay for their children’s educations, and help protect their own retirement savings.
PARENTS TURN 65
600,000 550,000
• Retirement Savings • 529 College Savings Plan
500,000 450,000
Retirement savings account has grown to
400,000
$601,922
350,000 300,000 250,000
529 savings account has grown to
200,000 150,000
$56,885
100,000 50,000 0
1
2
3
4
5
6
7
8
9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 Year
This chart from OppenheimerFunds, September 2012, is for illustrative purposes only. These hypothetical illustrations do not represent the performance of any specific investment. Investment contributions are based upon an average annual contribution of $5,570 into college and retirement savings vehicles; growth is determined by a 5% annual rate of return; and withdrawals represent the average cost of a public 4-year university (OppenheimerFunds, September 2012). Systematic investing does not assure a profit and does not protect against loss in declining markets. Before investing, investors should evaluate their long-term financial ability to participate in such a plan.
Ask your financial advisor how a 529 plan can work for you Get an early start on developing a comprehensive financial plan that includes both college and retirement savings. Contact your financial advisor to learn how a 529 plan can work within your overall savings strategy.
1. The persons portrayed in this example are fictional. This material does not constitute a recommendations as to the suitability of any investment for any person or persons having circumstances similar to those portrayed, and a financial advisor should be consulted.
Investments in 529 college savings plans are neither FDIC insured nor guaranteed and may lose some value. Some states offer favorable tax treatment to their residents only if they invest in the state’s own plan. Investors should consider before investing whether their or their designated beneficiary’s home state offers any state tax or other benefits that are only available for investments in such state’s qualified tuition program and should consult their tax advisor. Before investing in a plan, investors should carefully consider the investment objectives, risks, charges and expenses associated with municipal fund securities. Plan disclosure documents contain this and other information about a plan, and may be obtained by asking your financial advisor, visiting oppenheimerfunds.com or calling 1.800.CALL OPP (225.5677). Investors should read these documents carefully before investing. 529 Plans managed by OFI Private Investments Inc. are distributed by OppenheimerFunds Distributor, Inc. Member FINRA, SIPC Two World Financial Center, 225 Liberty Street, New York, NY 10281-1008 © 2012 OppenheimerFunds Distributor, Inc. All rights reserved.
GC0000.091.0512 October 10, 2012
qwer
?
Retirement
WITH A SOUND STRATEGY, YOU CAN SAVE FOR BOTH
qwer
Create a Strategy That Helps You Save for College AND Retirement College and retirement are two equally important, but completely different goals. Many families make the mistake of viewing their retirement savings as a source to fund a college education without realizing the negative impact this may have until they are closer to retiring. But the good news is that there is a way to save for both at the same time. Just as you make periodic contributions towards your retirement in an IRA or 401(k) plan, saving for a child’s college education can be just as easy and affordable when you open a tax-advantaged 529 college savings plan. So, with a little bit of planning, you could have a good start on funding a college education, potentially reducing the amount you have to borrow from your retirement savings account.
The Coopers
v
Two different approaches to sav THE COOPERS1 The high cost of not saving for college The Coopers are both 35 and have two children, Susan, age 2, and their newborn, Sam. Larry and Jane have saved $75,000 for retirement through a 401(k), and plan on contributing annually over the next 30 years. They also plan to use some of that money to pay for college.
$650,000
When Susan is ready for college, the Coopers will withdraw $25,000 annually to pay for college. In Susan’s third year of college, Sam will start attending the same school. That means Larry and Jane will have to withdraw $50,000 to cover college expenses.
AT YEAR 1, PARENTS ARE 35
By the time both children have graduated, the Coopers will have depleted their retirement account by $200,000. Even with consistent annual contributions, their projected retirement account balance will only be $383,035 by the time they are ready to retire.
CHILD 1 CHILD 2 TURNS TURNS 18 18
PARENTS TURN 65
$650,0
600,0
600,000 550,000
550,0
• Retirement Savings
500,000
500,0
450,0
450,000
Withdrawals are made to pay for college
400,000 350,000
400,0
350,0
300,0
300,000 250,000 200,000 150,000
Retirement savings account has grown to
250,0
$383,036
150,0
200,0
100,000
100,0
50,000
50,0
0
1
2
3
4
5
6
7
8
9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 Year
This chart from OppenheimerFunds, September 2012, is for illustrative purposes only. These hypothetical illustrations do not represent the performance of any specific investment. Investment contributions are based upon an average annual contribution of $5,570 into retirement savings vehicles; growth is determined by a 5% annual rate of return; and withdrawals represent the average cost of a public 4-year university (OppenheimerFunds, September 2012). Systematic investing does not assure a profit and does not protect against loss in declining markets. Before investing, investors should evaluate their long-term financial ability to participate in such a plan.
vs
Are you a Cooper or a Murphy?
the Murphys
ving for college and retirement
ARENTS TURN 65
0 31
THE MURPHYS1 Saving for both college and retirement may pay off The Murphys are also 35 and have two children, Jason, age 2, and Jodie, their newborn. They have also saved $75,000 for retirement through a 401(k), but, unlike the Coopers, the Murphys recog nize the importance of maintaining separate retirement and college savings accounts. They plan to divide their
$650,000
annual contributions between saving for retirement and 529 college s avings plans for their children. When Jodie turns 18, Robert and Rebecca plan to have enough money in their 529 plans to pay for more than two years of college, making it easier to stick with their plan to not withdraw any funds from their
AT YEAR 1, PARENTS ARE 35
CHILD 1 CHILD 2 TURNS TURNS 18 18
retirement account. Once Jodie graduates from college, they will be able to begin increasing the amount they contribute to their retirement account. The Murphys’ plan is designed to reduce the amount they will have to borrow to pay for their children’s educations, and help protect their own retirement savings.
PARENTS TURN 65
600,000 550,000
• Retirement Savings • 529 College Savings Plan
500,000 450,000
Retirement savings account has grown to
400,000
$601,922
350,000 300,000 250,000
529 savings account has grown to
200,000 150,000
$56,885
100,000 50,000 0
1
2
3
4
5
6
7
8
9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 Year
This chart from OppenheimerFunds, September 2012, is for illustrative purposes only. These hypothetical illustrations do not represent the performance of any specific investment. Investment contributions are based upon an average annual contribution of $5,570 into college and retirement savings vehicles; growth is determined by a 5% annual rate of return; and withdrawals represent the average cost of a public 4-year university (OppenheimerFunds, September 2012). Systematic investing does not assure a profit and does not protect against loss in declining markets. Before investing, investors should evaluate their long-term financial ability to participate in such a plan.
Ask your financial advisor how a 529 plan can work for you Get an early start on developing a comprehensive financial plan that includes both college and retirement savings. Contact your financial advisor to learn how a 529 plan can work within your overall savings strategy.
1. The persons portrayed in this example are fictional. This material does not constitute a recommendations as to the suitability of any investment for any person or persons having circumstances similar to those portrayed, and a financial advisor should be consulted.
Investments in 529 college savings plans are neither FDIC insured nor guaranteed and may lose some value. Some states offer favorable tax treatment to their residents only if they invest in the state’s own plan. Investors should consider before investing whether their or their designated beneficiary’s home state offers any state tax or other benefits that are only available for investments in such state’s qualified tuition program and should consult their tax advisor. Before investing in a plan, investors should carefully consider the investment objectives, risks, charges and expenses associated with municipal fund securities. Plan disclosure documents contain this and other information about a plan, and may be obtained by asking your financial advisor, visiting oppenheimerfunds.com or calling 1.800.CALL OPP (225.5677). Investors should read these documents carefully before investing. 529 Plans managed by OFI Private Investments Inc. are distributed by OppenheimerFunds Distributor, Inc. Member FINRA, SIPC Two World Financial Center, 225 Liberty Street, New York, NY 10281-1008 © 2012 OppenheimerFunds Distributor, Inc. All rights reserved.
GC0000.091.0512 October 10, 2012
qwer
