Family Financial Planning Guide

An honest framework for the decisions at hand. Not tax or investment advice — your specifics matter.

The cardinal rule: retirement before college

• You can borrow for college (your kid can too). You cannot borrow for retirement.
• Maxing retirement accounts first is almost always right — the tax advantage + employer match + compound runway dwarfs 529 tax benefits.
• Kids with merit scholarships, in-state public, or community-to-4-year paths can cap college at $100-200K total. Retirement under-funding can cost $1M+.

529 plan strategy

• State tax deduction for in-state 529 is often 5-9% — worth considering even if investment options are worse than out-of-state plans.
• Grandparent-owned 529s no longer reduce FAFSA aid (simplified FAFSA effective for 2024-25 and later).¹ Route family college funding through wealthy grandparents when possible.
• Superfunding: one donor can front-load 5 years of annual gift exclusion — $95,000 solo / $190,000 couple in 2026 (5 × $19,000).² Useful when a windfall needs a tax-efficient home.
• Over-funding exit (SECURE 2.0 § 126): unused 529 funds can be rolled to a Roth IRA for the beneficiary. $35,000 lifetime cap per beneficiary, 15-year account age required, annual rollover limited to the IRA contribution limit, subject to 5-year contribution look-back.³

Term life insurance layering

• Rule of thumb: 10-15x annual income per earner. Two-earner household: both earners need coverage, not just the higher earner.
• Term (not whole life) until kids are self-sufficient + mortgage paid. Whole life commissions are why it's pushed; term is what most families actually need.
• 20-30 year level term locks pricing. Laddering (e.g., $500K 30-year + $1M 15-year) lets coverage decline with need.

Disability insurance — the most underbought

• Per SSA data, roughly 1 in 4 workers entering the workforce at age 20 will become disabled before retirement — higher than lifetime mortality at the same age.⁴
• Group LTD through employer typically caps at 60% of base salary and pays in taxable dollars (when employer pays premiums). Individual LTD on top can reach ~80% of total comp, tax-free if you personally pay premiums.
• Own-occupation vs any-occupation definition matters enormously — "unable to do any job" is an extremely high bar; "unable to do your specific profession" pays far more cases.

Estate planning basics every family needs

• Will: appoint guardian for minor children. Without a will, state law decides.
• Revocable living trust: avoids probate, keeps minor-kid beneficiary structure private.
• HIPAA authorization + healthcare POA: lets your spouse (and adult kids once they're 18) handle health decisions.
• Financial POA: handles finances if you're incapacitated.
• Review every 3-5 years or after major events (new kid, move, death, divorce, significant asset change).

The coordination advantage

• Where families over-spend: buying whole life, maintaining outdated asset allocations, neglecting beneficiary updates, missing 529 state benefits.
• Where families under-spend: not getting proper disability, under-insured on term life, no estate documents beyond a basic will.
• A fee-only family-specialist advisor coordinates across these rather than selling what they earn commission on.

Sources

1. Federal Student Aid — FAFSA Simplification. Grandparent 529 contributions no longer counted as untaxed student income starting 2024-25.
2. IRC § 529 — Qualified Tuition Programs. Superfunding per § 529(c)(2)(B).
3. SECURE 2.0 Act § 126 — 529 to Roth IRA Rollover. $35K lifetime cap per beneficiary, 15-yr account age.
4. SSA — Disability Facts. Roughly 1 in 4 workers become disabled before retirement.
5. IRC § 101 — Life Insurance Proceeds (tax-free death benefit).
6. IRS — 2026 Gift Tax Annual Exclusion ($19,000).

Family planning rules verified against IRS, SSA, and Department of Education publications as of April 2026.