Retire early as kid heads to college?

by. Robert Powell

Veteran personal finance journalist Robert Powell answers your questions for USA WEEKEND.

Is it worth retiring early since retirement income is not counted on the FAFSA form for financial aid? I am 55, single and have 28 years of teaching experience and would receive 70% of my salary and would lose 3% yearly by not waiting until 35 years of experience. I would also have to pay health insurance until 62. My child is in 10th grade and wants to go to an Ivy League school, and I have $55,000 saved.

— Sharon O’Malley, York, Pa.

A little bit of information can be a dangerous thing, says Todd Fothergill, founder and managing director of Strategies For College Inc., a Hanover, N.H., consulting firm.

Retirement income is indeed counted on the Free Application for Federal Student Aid (FAFSA) and the CSS/Financial Aid Profile, which are the primary financial aid applications used by the Ivy League member institutions. In essence, FAFSA and CSS are counting the income that you report to the government on your tax return.

To completely address your question, however, more information is needed, says Fothergill. For example, what is your current income? What assets outside of retirement plans do you own? What is the financial position of the student’s other parent?

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