Yet Many Miss Tax Breaks of 529 College Savings Plans, Mainstay Funds Survey Finds
PARSIPPANY, N.J., October 22, 2002 Learning a lesson lost on their Baby Boomer parents, almost 9 in 10 Generation-Xers the roughly 50 million Americans born from 1967 to 1981 worry about paying for their children's education, and many have already begun saving, according to the 2nd annual GenX Survey conducted by the MainStay division of New York Life Investment Management LLC (NYLIM).
The MainStay survey reveals that GenXers are saving avidly for their children's education, with nearly half (42%) indicating that they are putting aside more for their own children's education than their parents did for them. Yet surprisingly, more than two-thirds (67%) of GenXers overall and 57% of those with children are unfamiliar with Internal Revenue Code 529 savings plans. Similarly, most do not have a financial plan, although the majority believes that they will need one in the future.
"We were surprised by the low level of GenXers currently participating in 529s, given their emphasis on planning ahead for their families. Lawmakers and the financial industry must do more to educate consumers about the benefits of tax advantaged college savings plans, or 529s," said Beverly J. Moore, Managing Director, NYLIM Retail Markets. "Due to the importance of the decision and the wide array of choices, investment professionals are a tremendous resource for families looking to establish a college savings plan."
The majority of GenXers (58%) are very/extremely concerned about saving for their children's education. 26% of the GenXers surveyed believe that education costs will be out of reach when their children are ready for college. Most expect to foot the bill themselves, with only 17% expecting any assistance from their parents in funding their children's education costs. Current popular savings vehicles include mutual funds (27%), separate accounts (21%), securities (20%), 529 plans (18%) and money market products (12%).
The MainStay GenX survey, completed in May 2002, polled 530 consumers ages 23 to 35 on their investment attitudes, behaviors, objectives and priorities. Research was conducted by an online research firm. Respondents were U.S. residents with investable assets of $50,000 or more.
With GenX investors as important clientele, NYLIM offers the CollegeSensesm 529 Higher Education Savings Plan in conjunction with Schoolhouse Capital, LLC, a wholly owned subsidiary of State Street Corporation. CollegeSense allows families to save for future qualified higher education expenses on a tax-advantaged basis. The portfolios' underlying funds are managed by New York Life Investment Management LLC under its MainStay and Eclipse brands, as well as by State Street Global Advisors and JPMorgan Fleming Asset Management. For more information, visit the CollegeSense site at www.collegesense.com.
MainStay Funds cover most major asset categories, including equity, fixed income, high yield, and international. The MainStay Funds offer active and quantitative management and are distributed by NYLIFE Distributors Inc., NYLIM Center, 169 Lackawanna Avenue, Parsippany, New Jersey 07054. For more information about any of the MainStay Funds, including a free prospectus that includes fees and expenses, call (800) MAINSTAY or visit the MainStay Funds Web site at www.mainstayfunds.com. Please read the prospectus carefully before investing.
With more than $150 billion in assets under management as of June 30, 2002, NYLIM and its affiliates provide a wide range of investment services to institutional, individual, corporate, public, and Taft-Hartley clients, including institutional asset management, retail investments, retirement services, guaranteed products, real estate investments, and alternative investments. For more information, visit the New York Life Investment Management site at www.nylim.com.
State Street Corporation (NYSE: STT) is the world's leading specialist in providing sophisticated global investors with investment servicing, investment management, investment research and trading services. With $5.7 trillion in assets under custody and $707 billion in assets under management, State Street is headquartered in Boston, Massachusetts and operates in 22 countries and 100 markets worldwide. For more information, visit State Street's Web site at www.statestreet.com.
Schoolhouse Capital, LLC, Boston, Mass., a subsidiary of State Street Corporation, was initiated by State Street Global Advisors (SSgA) to provide integrated financial solutions to the education marketplace including colleges and universities, parents, students and families, and endowments and foundations.
Securities are offered through NYLIFE Distributors, 169 Lackawanna Avenue, Parsippany, NJ 07054. There are risks associated with investing in a 529 Plan. Please consult your financial professional.
Scholar'sEdge is an IRC Section 529 Trust available to all U.S. residents and is sponsored by The Education Trust Board of New Mexico. CollegeSense is distributed by NYLIFE Distributors LLC, NYLIM Center, 169 Lackawanna Avenue, Parsippany, NJ 07054. Schoolhouse Capital, LLC, a wholly owned subsidiary of State Street Corporation, is the program manager for CollegeSense. Please read the Disclosure Statement (and the prospectuses of the mutual funds in which CollegeSense invests) available at www.scholarsedge529.com or by calling us toll free at 1-866-529-SENSE (866-529-7367), prior to investing.
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