3405: [Part 2] The Greatest Risk To My Retirement Goal by Craig Stephens of Retire Before Dad on Securing Your Future

Summary

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Optimal Finance Daily, Episode 3405 Summary

Title: [Part 2] The Greatest Risk To My Retirement Goal by Craig Stephens of Retire Before Dad on Securing Your Future
Date: December 30, 2025
Host: Diania Merriam
Source article: Craig Stephens, RetireBeforeDad.com

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Episode Overview

In this episode, Diania Merriam narrates the second part of Craig Stephens’ detailed analysis on the greatest risk to his retirement goal: the rising and uncertain cost of his children’s college education. Craig shares his practical approach to 529 college savings planning, estimates of future college costs, methods for bridging potential funding gaps, and deep reflections on the value and risks of investing in higher education. The discussion is rooted in personal experience but loaded with universally useful strategies for any listener planning for educational expenses and financial independence.

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Key Discussion Points & Insights

1. 529 Savings Plans: Strategy & Decisions

[01:04–02:22]

• Craig recounts starting a 529 college savings plan for each of his children as soon as possible, emphasizing state tax benefits:
  • “I researched 529 savings plans extensively for both of them and wrote a detailed Virginia529 review... The conclusion I came to was that the tax benefit given by the state outweighs everything else.” (Craig, 01:31)
• He commits $300/month per child, investing aggressively in index stock funds, planning to shift towards conservative investments closer to college years.

2. Forecasting College Costs for 2030

[02:23–03:45]

• Craig develops a new spreadsheet to estimate college costs years out, basing models on in-state tuition and making conservative assumptions (no scholarships or aid).
  • “Estimating the cost of college 15 years out is not an exact science... I tried my best to keep it simple.” (Craig, 02:34)
• Using historical data and inflation rates (3–7%), he projects:
  • ~$454,000 needed for both kids for four years each by 2030.
  • His current savings plan will fall ~$40k–$92k short.

3. Managing the Savings Gap

[03:46–05:02]

• Craig stresses these are rough estimates and that annual reviews are crucial.
• Adjusting assumptions like investment returns can significantly impact the gap.
• He is open to increasing contributions and discusses alternative funding options:
  • Withdrawing Roth IRA contributions without penalty.
  • Selling investments or covering tuition from investment income.
  • Borrowing as a last resort (“I don't intend to use debt to pay for college…” (Craig, 05:01)).
• Cautions on over-saving in tax-advantaged accounts due to potential penalty on unused funds, but notes unused 529 money can be transferred between siblings.

4. Personal Update & Family Choices

[05:03–06:09]

• Craig reveals another significant factor affecting his financial future: his family is expecting a third child.
  • “While you can put a cost on raising a child in college, there's no way to estimate the profound impact of welcoming another person into the world... Kids come with a price tag, but ultimately, they're priceless.” (Craig, 06:03)
• Accepts that retirement goals may be delayed and embraces the unpredictable joys (and costs) of life.

5. ROI and Risks of College Degrees

[09:39–12:00]

• Craig questions the value—and risk—of paying for college in the modern economy.
  • “For many, the ROI for that college degree just isn’t there... According to Mark Kantrowitz… less than half of college students graduate on time.” (Craig, 09:44)
• Shares alarming statistics:
  • College costs up 169% since 1980, but young adult wages only up 19%.
  • Nearly 40% of graduates doubt college was worth it; chief reasons are not using their degree or being unable to find work in their field.
• Warns that, while college, marriage, and entrepreneurship are all risky, informed and thoughtful decisions are vital:
  • “Many things we decide to do have terrible odds… It doesn’t mean you shouldn’t get married, start a business, or go to college. But… we should enter into these decisions with eyes wide open and continually question our assumptions.” (Craig, 11:45)

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Notable Quotes & Memorable Moments

• On 529 Plan Choices:
  “The tax benefit given by the state outweighs everything else. So if your state offers a plan with tax benefits, it's likely the best choice for you.” (Craig Stevens, 01:31)

• On Cost Forecasting:
  “Estimating the cost of college 15 years out is not an exact science... I tried my best to keep it simple.” (02:34)

• On College ROI Doubts:
  “Nearly 40% of people who earn a college degree have doubts it was worth it. Of this group, 40% say it's because they aren't using their degree, and 28% say it's because they can't find a job in their field.” (Craig, 11:20)

• On Parenthood vs. Financial Goals:
  “While you can put a cost on raising a child in college, there's no way to estimate the profound impact of welcoming another person into the world... Kids come with a price tag, but ultimately, they're priceless. If my retirement goal is delayed because we had another child, so be it.” (Craig, 06:03)

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Timestamps for Important Segments

• 529 Plan Research & Contributions: 01:04–02:22
• Forecasting College Costs & Inflation: 02:23–03:45
• Managing Shortfalls & Funding Options: 03:46–05:02
• Family Update – Expecting a Third Child: 05:03–06:09
• College ROI, Dropout Stats, and Skepticism: 09:39–12:00

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Tone & Style

Craig’s tone throughout the narration is both analytical and reflective—he shares spreadsheet-driven logic while interspersing personal anecdotes and honest emotion. The overall style is practical, relatable, and slightly cautionary, encouraging listeners to plan methodically but also embrace the unpredictable beauty of family life.

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Conclusion

This episode of Optimal Finance Daily delivers a blend of tactical financial planning for education, hard questions about the value of college, and heartfelt reflections about family priorities. Listeners come away with actionable tips for 529 planning, realism about funding gaps, and—perhaps most importantly—a reminder that life’s greatest investments aren’t always financial.

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Transcript

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[Craig Stevens]

This is Optimal Finance Daily the Greatest Risk to My Retirement Goal Part 2 by Craig Stevens of Retire Before Dad.com Looking at today's numbers, our son is now 3 years old. We started his 529 plan the month we returned home from the hospital. Our daughter was born about a week after I started this blog. I researched 529 savings plans extensively for both of them and wrote a detailed Virginia529 review, which continues to be the preeminent Virginia specific 529 review on the Internet. The conclusion I came to was that the tax benefit given by the state outweighs everything else. So if your state offers a plan with tax benefits, it's likely the best choice for you. Even if it's not a perfect plan, we contribute $300 per month per kid to a few index stock funds. I'm planning to keep the money aggressively invested in stocks until we're within five to six years of the college years. Before getting more conservative, the current balance on the two 529 college savings accounts combined is about $19,000. That would pay for almost one year of in state tuition and expenses. We have a long way to go to cover the other seven years of school, not to mention tuition inflation. At this rate, if we continue to invest $300 per month on top of what's already there, compounding at 8%, I estimate we'll have about $150,000 by the time my son is ready for school and $141,000 for my daughter when she starts. But is that enough? Forecasting the cost of College in 2030 I recently created a new spreadsheet to model what the cost of college will be for my kids starting in the year 2030. Again, the input variables can be overly complicated, so I tried my best to keep it simple. Estimating the cost of college 15 years out is not an exact science. There's plenty of online calculators out there, but I particularly like this one called the world's simplest college cost calculator. Now, while today we're committing to pay for our children's college education, we have to make some assumptions in order to narrow the target amount of savings we'll need. We're committing to four years of undergraduate studies, including tuition and expenses. For now, I'm also limiting my model to in state tuition. Private colleges are outrageously priced. Unless we're substantially wealthier by the time school starts, I'll strongly discourage a low ROI private college. The one exception may be certain Ivy League or other prestigious schools. The probability of any kid getting into those schools is low, but you never know. I've also made the assumption that my kids will not get any scholarships or government assistance. In my model, I looked at the cost of room and board for the top five largest in state universities. Their websites openly disclose the yearly cost of enrollment and living expenses. I averaged the school's total cost per year. For the 2014-2015 academic year, that amounted to $23,500. Similar cost estimates online were in the 20 to 25,000 range. Next, I estimated a range of tuition inflation escalators. I used 3% as a low inflation rate and 7% at the higher end. I then calculated the low and high cost for one and four years of college. Rounding things, I estimate four years of my son's college education will cost roughly $221,000 for my daughter, $233,000. That tells me I'll need roughly $454,000 saved up by 2030 or so. The world's simplest college calculator gave me values of 191,000 for my son and $203,000 for my daughter, for a total of $394,000. For an estimate this far out, I'm more comfortable using the higher estimated number from my spreadsheet. Based on what I estimate we'll save for my son, we're forecasted to be about 40 to $70,000 short of the needed funds to pay all four years of school for my daughter. We're about $62,000 to $92,000 short. Now, again, these are very rough estimates. Any change to a variable alters the numbers by tens of thousands of dollars. For example, if I change the rate of return on investments to 10%, the shortage just about disappears for my son and halves it for my daughter. The key is to continue updating these estimates on a yearly basis. Each year we get closer to freshman year, the numbers become more reliable on both the savings and cost estimates. I can always increase the amount I'm saving each month too. In fact, I'm considering this right now to take advantage of the many years of compounding ahead. However, I can always access money for tuition from other places when it's time to foot the bill In a post I wrote about the Roth IRA and early retirement, I suggested this as a possible source to pay for college because contributions can be withdrawn at any time without penalty. I could also sell investments to cover the shortage or perhaps cash flow the balance with investment income. I don't intend to use debt to pay for college, but borrowing via a home equity line of credit would be a last resort. Paying for the balance with cash flow or selling investments may actually be ideal. What I definitely don't want is to over save in tax advantaged accounts and have to pay a penalty for withdrawing unused savings. However, if I over save for my son in tax advantaged savings, I can transfer unused portions to my daughter's account One last thing affecting my retirement goal. The reason I went over the college savings numbers recently is because we'll need to be adding 50% to our current monthly savings and forecasts in non financial terms. We're expecting a third child. I figured I'd save this announcement for those that read the whole article. As much as I like to make detailed spreadsheets for all major financial decisions in our lives, this one was a decision we made without any consideration of the cost. While you can put a cost on raising a child in college, there's no way to estimate the profound impact of welcoming another person into the world. Kids come with a price tag, but ultimately they're priceless. If my retirement goal is delayed because we had another child, so be it. You just listened to part two of the post titled the Greatest Risk to My Retirement Goal by Craig Stevens of RetireBeforeDad.com Imagine you're a business owner who.

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[Craig Stevens]

There are clearly tons of benefits to getting an education, but on the other side, for many the ROI for that college degree just isn't there. If you're going to school to be a lawyer or a doctor, you're fairly certain that you'll enjoy it and actually use your degree. And there's a very clear return on investment that can justify the costs. That makes sense to me. But looking at some of the stats around how this actually pans out for people is concerning. According to Mark Kantrowitz, who wrote the book titled who Graduates from College? Who Doesn't? Less than half of college students graduate on time. Even after six years, less than 60% of students at four year colleges have earned a bachelor's degree. The track record for community college is even worse, with less than 20% of community college students earning an associate's degree or certificate. I believe this demonstrates how many people take on the cost of school with the best of intentions, but for likely a variety of reasons, it doesn't work out as they hoped. Maybe life circumstances caused them to drop out, or they realized that their area of study just wasn't a good fit. And according to an analysis of US Census Bureau of Labor Statistics and National center for Educational Statistics data for the years 1980 to 2019 by Georgetown University researchers. College costs have increased by 169% over the past four decades, while earnings for workers between the ages of 22 and 27 have increased by just 19%. It makes logical sense that a degree will lead to a higher paying job to justify the cost of that degree. But many people graduate from school and are met with the harsh reality of stagnating wages. Furthermore, a finder.com survey found that nearly 40% of people who earn a college degree have doubts it was worth it. Of this group, 40% say it's because they aren't using their degree, and 28% say it's because they can't find a job in their field. Many things we decide to do have terrible odds. Marriage has a 50% chance of divorce, and the overwhelming majority of entrepreneurs fail. It doesn't mean you shouldn't get married, start a business, or go to college. But I do think we should enter into these decisions with eyes wide open and continually question our assumptions. And that's another episode of Optimal Finance Daily in the books. Thank you for your support and for listening every day. Have a great rest of your day and I'll catch you tomorrow where your optimal life awaits.