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If you are retired and have low income, then your non-retirement assets are the main thing they will look at. Depending on the school, they may or may not look at retirement assets. So spending down your taxable assets could result in larger financial aid. If it is loans, you may not care, but some could be grants.

We are paying for college, and have simply come to grips that we will pay full price forever. It's what we saved for, so whatever. We could put our taxable funds into an annuity that would be then considered "retirement" funds for FAFSA. I do need to look at that further, frankly considering it more of an insurance against the elderly financial stupidity that has been our experience in dealing with Dad, but have zero desire to put all or even most of our taxable funds there. In addition, we would have to put the saved tuition money there, and then what if the aid did not come through? There will only be 5 years left of college costs when we retire. Youngest has the option of two really great sets of state schools to choose from, since PA allows you to retain residency status even if your family moves out and we are moving to our retirement home when he graduates high school. That state will allow us to change him from out of state to resident after one year. But we won't restrict him on where he wants to go if it is for a good academic reason.

I did run across the Fafsa Simplified Needs Test in my research, an option that is available to those making less than $50K/year and don't need to file a 1040. We would have easily been able to manipulate our finances to be below that income, but the other requirements which include things like no cap gains or taxes on retirement accounts, would be tough. (I take RMDs from an inherited IRA.) The Simplified Needs Test ignores assets:

Maybe we will figure it out, maybe the link will help someone else out. But if we did manage to manipulate our situation to qualify for the simplified needs test for Fafsa, that would also be 5 years less of Roth conversions that we could do. There are so many moving pieces that it gets really complicated trying to figure out the best approach, cause decision A impacts result B.

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