Build an addition or move? Save for retirement or a child's education? Financial advisors consider real-life debates.
Q: We're in good financial shape at the moment—my husband has a nice pension set up, we both have IRAs, and have invested our money into 403(b) plans. So do we put money away for our daughter's college education or do we get ourselves settled for retirement so that we won't be a financial burden to her?
A: In 2010 there will be a change in retirement planning laws that allows eligible people to convert an IRA to a Roth IRA. The advantage is that the taxes are paid earlier and the funds can be used later for retirement or for a child's education. —Herb White, certified financial planner, Life Certain Wealth Strategies.
A: If college is several years away, you may consider saving within a tax-advantaged plan, such as a 529 plan. Keep in mind that you can always take loans to fund college education; however, you cannot take loans to fund retirement. —Lisa Purcell, wealth management adviser, TIAA-CREF
Q: Should we build an addition onto our small Highland-area home or is it time to move to 'burbs like Westminster and Broomfield for more space?
A: If you like where you live and your children are enjoying the school system, it might make sense to build an addition rather than disrupt those relationships. Before you build, research similar additions in your neighborhood to determine if the emotional gain is worth the cost and inconvenience of renovation. —Herb White, certified financial planner, Life Certain Wealth Strategies
A: Consider the market—Highland has one of the highest rates of average price appreciation in the Denver metropolitan area; in Westminster and Broomfield prices are stable and/or declining. —Michael Canon, broker associate, Your Castle Real Estate
Q: We have a rental townhouse in Lakewood that has a small negative cash flow. Should we wait for the market to recover or should we sell it now and use the cash to finance other goals?
A: If your tenant is reasonably easy to work with and if the house is below $200,000, then I would wait until the market recovers to sell the home. I know that prices will bounce back to 2004 levels, but it might take three to five years. If you can wait for the recovery, you will come out ahead. —Lon Welsh, owner, Your Castle Real Estate
Q: The cost of daycare in Denver is astronomical. How do I balance that with wanting to pay down debt, save for our children's college tuition and our retirement, and make home improvements?
A: See if your employer has a flexible spending account (FSA) where you can designate pretax income and offset the cost of childcare. —Herb White, certified financial planner, Life Certain Wealth Strategies
A: Though childcare tends to have a large upfront cost, this will typically decrease as children grow older and enter into school. Once they do, you can strategize to meet other financial goals. —Lisa Purcell, wealth management adviser, TIAA-CREF