Awkward gap in income, what should I draw on to cover myself?
Hey all,
I have a very specific scenario and wondering what others would do. It's a very first world problem but I'm genuinely torn. I am graduating from college and have a job/program lined up but in a slight pickle on how to cover costs until I start getting income in July. I've been very fortunate to not have to worry much about money throughout college due to parental support via a 529. I also have, partially through their support, a brokerage with 36k total (half roth IRA, half taxable brokerage, all in index funds). I don't intend to touch these funds until retirement, and would prefer to retire early. Due to quirks in the university financial aid system, I ended up paying much less for college than I anticipated. But in this anticipation, my parents earmarked an additional 70k which hasn't been used, just sitting in an investment account.
I will be becoming a teacher through a program that provides a salary while pursuing a masters. I do not intend to use any of the 70k for this since I will be paying for the masters entirely through the TEACH grant and loans which will be forgiven after 5 years through the Teacher Loan Forgiveness program (the total is such that if I fulfill the requirements I will not pay a cent for the masters). Therefore, I would like to be able to "return" the money to my parents, who are nearing retirement age. This is with the idea that they can retire about 2 years earlier with the money (pays for health insurance a couple years). I should mention that my parents are quite divorced (don't speak to each other) and the money is being held by my Dad. If I were to relinquish the money they would split it equally, as they both contributed. There is no legal mechanism to ensure this but my Dad is very principled when it comes to these things.
I'm trying to convince my mom to retire because she works too much and it takes a toll on her body. She already probably could but certainly could with that money. Plus, I feel like she would really love being retired, as she has lots of hobbies and projects. My Dad is working a job he's not very attached to, and the money could open him up for work that is more interesting, or simply to retire earlier. Because the 70k was "extra" to cover anticipated private school costs, i.e not part of their normal 529 saving that, for example, my brother got, I don't feel the money is "mine" in the same way the 529 or the brokerage is. Plus I feel my parents have contributed quite a lot to me and I would like to be able to pay some of it back.
Problem is I have exhausted the 529 account at this point and will be left in the red approximately 2-3k come July, when I will start getting a salary. I'm wondering where I should go to fill the gap, my brokerage or the money earmarked for me? On the one hand I could draw from my brokerage but I feel like this sets a bad precedent since I would prefer not to touch the money, especially so early and for a relatively trivial purpose. I would not be able to replace lost gains quickly as my salary this year is just about livable as is (will approximately double next year so I will save a lot more then). Alternatively I could call on the earmarked funds. This would not be ideal because 1) I'd rather not touch the money as I don't really feel it's "mine" especially since I do have money 2) It makes it harder to say that I don't need the money and that my parents should utilize the money, which I would like them to do for their own health and happiness. In a sense I am at least partially drawing on their money no matter what but it more has to do with the source and the vibes it puts out.
So, what would you do in this scenario?