What potential benefits do UTMA accounts offer to families? Assets in an UTMA account (or UGMA account, the earlier version still used in a few states) are owned by the child, not the parents. As a result, UTMA investment income is generally taxed at the child’s tax rate instead of the parents’ tax rate. That can mean big savings – unless the “kiddie tax” strikes.

In 2013, the first $1,000 earned by an UTMA account is tax-free, providing that child has no other income and is younger than 19 (or younger than 24 and a full-time student whose unearned income does not provide 50% of his/her support). The next $1,000 of investment income from the UTMA is taxed at the child’s tax rate. The kiddie tax kicks in at the $2,000 threshold: account earnings above $2,000 are taxed at the parents’ top marginal tax rate and become part of the parents’ taxable income. (One asterisk: all income will be reported on the child’s tax return if he or she is age 19 and not a student, or age 24 regardless of student status.) Practically speaking, wealthy families can potentially see tax savings via an UTMA account by shifting ownership of some fixed-income securities in a portfolio to a child. As capital gains and dividends aren’t taxed as ordinary income, there is a little less merit in passing such investment income off to a minor.

College keeps growing more expensive, and certain families are just too wealthy to be eligible for financial aid. Some parents create UTMA accounts in response to this dilemma.

What are the potential drawbacks of UTMA accounts? First of all, the gifts and transfers you make to the minor via the account are irrevocable. The adult custodian only has control over those assets until the minor turns 18 (though UTMA custodianships can last up to age 21 or age 25 in some states).

Once the UTMA custodianship ends, the young adult now in control of the assets can use those assets for any purpose. Anything. What was once seen as a college savings fund may potentially “go to waste” on trivial pursuits.⁴

Many affluent families assume that their children can’t qualify for college loans, and that their kids are out of the running for need-based scholarships and grants. This often proves inaccurate. So if you aren’t yet a multimillionaire, there may not be much reason to have an UTMA account as a college savings fund – it may reduce your student’s eligibility for aid. College financial aid formulas usually demand that students contribute more of their total assets to college costs each academic year (in the neighborhood of 20-25%, sometimes as much as 35%). Parents are typically asked to contribute a much lower percentage of their total assets per year. While there may be a silver lining in proceeding through college with less financial aid (i.e., lower student loan debt for the future), it still amounts to “good debt”.

There are two factors that lead many families away from UTMA accounts toward 529 plans. In a 529 plan, the account holder controls the assets – no control is ceded to the minor. In addition, withdrawals from a 529 plan are tax-free as long as they are used for qualified educational expenses, while withdrawals from an UTMA are taxed above $1,000. A 529 plan allows invested assets to grow with tax deferral as well.

UTMA accounts are hardly the only option. If you want to make a gift to a child or help a child save for college, in the end you may determine that a trust, a 529 plan, a Coverdell ESA or a Roth IRA represents a more appropriate choice.

Consumer and producer prices retreated last month. The federal government’s Consumer Price Index fell 0.4%, a monthly descent unseen since December 2008; the Producer Price Index declined 0.7%, its biggest monthly drop in three years. Consumer prices also fell for a second straight month; the last time that happened was in late 2008. The core CPI did rise 0.1% in April; the yearly gain in the overall CPI was just 1.1%.

THREE MORE POSITIVE SIGNS FOR THE ECONOMY

The University of Michigan’s initial May consumer sentiment survey came in at 83.7 – its highest level since July 2007, 7.3 points above the final April mark. After falling 0.2% for March, the Conference Board’s index of U.S. leading indicators rose 0.6% for April. Census Bureau data showed retail sales ticking up 0.1% in April and 3.7% in the past year.

HOUSING STARTS PLUNGE, BUILDING PERMITS SOAR

While the year-over-year increase was 13.1%, housing starts plummeted 16.5% in April, largely due to a 37.8% drop in apartment starts. On the other hand,  last month brought a 14.3% rise in building permits … marked by a 40.6% jump in permits for apartment construction.

BULLS KEEP RUNNING

The S&P 500 is now on a 4-week winning streak. It rose another 1.98% last week to settle at 1,666.12 Friday. Complementing that 5-day gain, the NASDAQ went +1.82% last week while the DJIA went +1.56%; at Friday’s closing bell, the NASDAQ settled at 3,498.97 and the Dow at 15,354.40. A truly impressive factoid: the NASDAQ and S&P have gained 1% or more in each of the past four weeks.

THIS WEEK: Monday brings earnings from Campbell Soup, TiVo and Urban Outfitters. On Tuesday, Best Buy, Home Depot, Medtronic, Vodafone, Saks, TJX and NetApp announce quarterly results. Wednesday, NAR releases its report on April existing home sales, the Federal Reserve releases the May 1 FOMC minutes, and Fed chairman Ben Bernanke testifies before Congress; Staples, L Brands, PetSmart, Toll Brothers, Target, Lowe’s and Hewlett-Packard post earnings. The Census Bureau report on April new home sales appears Thursday, along with the March FHFA housing price index and earnings from Dollar Tree, Gamestop, Ralph Lauren, Sears Holdings, Gap, Ross Stores, Aeropostale and Pandora. Friday offers the April durable goods orders report and Q1 results from Abercrombie & Fitch.

At the closing bell on May 10, 90% of S&P 500 firms had reported quarterly results. According to Reuters, 67% of them have surpassed earnings forecasts and 24% have fallen short of projections. Should the remaining 50 components report results matching estimates, earnings will be up 5.3% on last year. Sales gains are another story: just 46% of companies reporting so far have beaten their revenue forecasts.

FED RAMPS UP ITS FINANCIAL SCRUTINY

Federal Reserve chairman Ben Bernanke said Friday that the central bank was now keeping close tabs on the “shadow banking” sector that bred the toxic assets associated with the last credit crisis. At the Chicago Fed’s banking conference, he noted that “careful monitoring for signs of emerging vulnerabilities” constituted “probably our best defense against complacency during extended periods of calm”. In widening its oversight, the Fed is also watching asset markets, consumers and businesses for signs of systemic risk in addition to banks.

OIL MOVES HIGHER, GOLD LOSES GROUND

COMEX gold retreated 1.76% last week, and that was mirrored by silver’s 1.25% weekly loss; the dollar gained 1.25% across five days. NYMEX crude rose 0.45% for the week. At Friday’s close, oil settled at $96.04 and gold at $1,443.30.

ANOTHER WEEK OF GAINS, MORE ALL-TIME HIGHS

The Dow went +0.97% last week to close at 15,118.49 Friday – a record high. The S&P 500 gained 1.19% last week to settle at another all-time peak of 1,633.70 Friday. After a 1.72% weekly gain, the NASDAQ ended Friday’s trading session at 3,436.58.

THIS WEEK: The Commerce Department issues its April retail sales report Monday, and Anglogold Ashanti and Take Two Interactive announce Q1 results. Nothing major is scheduled for Tuesday. Wednesday, the April PPI comes out plus the May NAHB housing index and data on April industrial output; earnings from Macy’s, Cisco and Deere & Co. also appear. Thursday, April’s CPI arrives along with the latest initial claims figures, data on April housing starts and building permits, and a wave of earnings mostly from major retailers (Kohl’s, Wal-Mart, Nordstrom, JCPenney, Autodesk, Marvell Tech and Applied Materials). Friday brings the preliminary May consumer sentiment index from the University of Michigan and the Conference Board’s April leading indicators index.

QE3 has undeniably boosted the stock market and assisted the real estate recovery. Yet at some point, the Fed will decide to let the economy stand on its own and stop its aggressive easing of monetary policy. Wall Street is beginning to wonder how and when that will occur.

Will the Fed wind down QE3 in early 2014? Quite possibly – but it could happen sooner. Bloomberg recently polled 47 economists for their opinions, and 61% of them felt that the Fed would wrap up QE3 in the first half of 2014. Another 11% thought the central bank would halt its bond purchases in the fourth quarter.

What will the Fed’s first step be? Abruptly ending QE3 could be foolhardy. The median estimate in Bloomberg’s poll was for an initial cut to $50 billion in purchases per month, evenly split between mortgage-linked securities and Treasuries.

Does anyone think the Fed might increase its bond buying? That possibility is on the table. On May 1, the Fed said that it “is prepared to increase or reduce the pace of its purchases” depending on how “the outlook for the labor market or inflation changes.”

As the New York Times notes, Fed officials don’t see a whole lot of merit in increasing bond purchases. In the first quarter, the central bank already bought an amount of securities roughly equivalent to the volume of new mortgage bond issuance.

The latest indicators haven’t been great by any means: the jobless rate is still closer to 8% than 6.5% (the point at which the Fed would consider raising interest rates), the pace of manufacturing seems to have slowed this spring (the Institute for Supply Management’s factory index came in at 50.7 for March), and Q1 GDP was estimated at 2.5%. Is all this just another spring swoon, or should the Fed buy more assets in response to these indicators?

If the sequester truly damages the recovery and the Fed elects to buy more bonds instead of less, it certainly has the leeway to pull it off. The annual core inflation rate, as measured by the Commerce Department’s personal consumption expenditures (PCE) index, was just 1.1% in March. The central bank has an inflation target of 2.0%.

The status quo may prevail into winter. The Fed has no compelling reason to stop buying securities in the near term. By gradually reducing its asset purchases, it could try to engineer a soft landing for the stock and real estate markets – and considering that the Dow pulled back about 2,000 points shortly after the end of both QE1 and QE2, there is every reason to strive for that outcome.

As JPMorgan Chase’s chief U.S. economist Michael Feroli noted last week, “In effect, the Fed signaled that the pace of asset purchases would be data-dependent in both directions, but that right now the data gives them little reason to change in either direction.”

What do you gain by doing this? The possible tax benefits of a qualified charitable distribution (QCD) from an IRA are threefold.

A QCD counts toward your RMD, but it doesn’t count as taxable income. If you dread mandatory IRA withdrawals and the taxes that come with them, you should know that a charitable IRA gift can be used to satisfy all or part of the annual Required Minimum Distribution. At the same time, the contribution amount is excluded from your gross income. With higher tax rates and surtaxes kicking in this year, reducing your AGI may be a priority.

A QCD can help you reduce the size of your taxable estate. Most of the money in a traditional IRA will eventually be taxable. Donating some or all of these assets to charity will lower your taxable estate dollar for dollar. (As you can surmise, QCDs are more beneficial to traditional IRA owners than Roth IRA owners from this standpoint.)

A QCD could also help you contend with charitable donation limits. You may reach a point where you would like to donate an amount greater than 50% of your AGI to charity. Normally, the IRS doesn’t allow that – but charitable IRA gifts don’t count against that 50% limit as they aren’t included in a taxpayer’s gross income. While a charitable IRA gift isn’t tax-deductible, you may not itemize to begin with – many retirees just take the standard deduction.

How do you do this? To realize most or all of these tax perks, the gift has to take the form of a qualified charitable distribution (QCD), alternately known as a trustee-to-trustee transfer or IRA charitable rollover. In other words, the financial firm serving as the trustee of your IRA writes a check directly to the charity. A financial professional you know and trust can help you fill out the accompanying paperwork.

If the IRA trustee makes the check payable to you and you deposit it and write a check for the equivalent amount made payable to the charity, it is a taxable event and the whole purpose of the charitable IRA gift is defeated. Should you make that blunder, you will have to declare the income and just take a normal charitable deduction on the donation.

What does the fine print say? To make a QCD, you have to own an IRA and be age 70½ or older. You can’t make a QCD from an employer-sponsored retirement account such as a 401(k) or 403(b); in fact, you can’t make a QCD from a SEP or Simple IRA either.

The QCD can’t be made in a way whereby you would derive benefits from the charity or foundation later. It can’t become the basis of a charitable remainder trust or a gift annuity, for example. A QCD also can’t be made to a donor-advised fund (via which the contributed assets would be invested and grow tax-free prior to the actual charitable donation).

A QCD can’t be a split interest gift. The amount of the QCD must otherwise have been considered taxable income, and you are not permitted to claim a charitable deduction for it.

Help a charity, help your financial situation. If you are well off and don’t really need or want the additional income and income taxes that would result from your RMD, a charitable IRA gift may offer you a solution with the flavor of a win-win – a boon for the charity, a tax break for you and/or your heirs.

April brought a rebound in hiring. Employers added 165,000 jobs, and so the unemployment rate reached a four-year low. (The Labor Department also revised March’s job gains upward to 138,000.) Payrolls have now expanded by an average of 189,000 jobs a month during the last six months.

CONSUMER SPENDING, OUTLOOK IMPROVE

Household spending increased 0.2% in March, the Commerce Department noted – part of a broader 3.2% advance for the first quarter. The Conference Board’s April consumer confidence index soared 6.2 points to 69.1, far exceeding the 61.0 consensus forecast of economists polled by Bloomberg.

STRONG SIGNALS OF A HOUSING COMEBACK

Home equity is definitely being restored: the latest 20-city S&P/Case-Shiller Home Price Index (February) shows a 9.3% year-over-year increase, the largest annual gain recorded in six years. The National Association of Realtors reported a 1.5% March gain in its pending home sales index, with the yearly gain at 7.0%.

IS MANUFACTURING COOLING DOWN?

The Institute for Supply Management’s April factory index came in at 50.7 last week, the weakest reading in nine months and down from 0.6 from March. ISM’s April service sector index also declined 1.3 points off the March reading of 53.1.

S&P TOPS 1,600, FED REASSURES INVESTORS

Last week brought major gains for the Dow (+1.78% to 14,973.96), S&P 500 (+2.03% to 1,614.42) and NASDAQ (+3.03% to 3,378.63). On May 1, the Federal Reserve said it would keep buying $85 billion in bonds per month for the near future, noting that the pace of asset purchases could even increase if needed.

THIS WEEK: Tyson Foods, Sysco, Anadarko and First Solar report quarterly results Monday. Tuesday, the market awaits earnings from WholeFoods, Walt Disney, Trip Advisor, HSBC, DirecTV, Electronic Arts, Marathon Oil, Symantec, Live Nation, WebMD and Zillow. Wednesday, earnings are in from Liberty Interactive, Green Mountain Coffee, Activision Blizzard, AOL, Sodastream, Wendy’s, Toyota, Liberty Media, Groupon, Monster Beverage, NewsCorp, Tesla Motors and Transocean. Thursday brings a report on March wholesale inventories, the latest initial jobless claims figures, and quarterly results from Sony, Nvidia, Dish Network, Priceline.com and Dean Foods. On Friday, Fed chairman Ben Bernanke speaks at a Chicago banking conference and ArcelorMittal and GoldFields announce earnings.

What do those fees pay for? In many cases, routine clerical work. Few estates require more than that. Heirs of small, five-figure estates may be allowed to claim property through affidavit, but this convenience isn’t extended for larger estates.

So how you can exempt more of your assets from probate and its costs? Here are some ideas.

Joint accounts. Jointly titled property with the right of survivorship is not subject to probate. It simply goes to the surviving spouse when one spouse passes. There are a couple of variations on this. Some states allow tenancy by the entirety, in which married spouses each own an undivided interest in property with the right of survivorship. A few states allow community property with right of survivorship; assets titled in this way also skip the probate process.

Joint accounts may be exempt from probate, but they can still face legal challenges – especially bank accounts when the title is modified by a bank employee rather than a lawyer. The signature card may not contain survivorship language, for example. Or, a joint account with rights of survivorship may be found inconsistent with language in a will.

POD & TOD accounts.  Payable-on-death and transfer-on-death forms are used to permit easy transfer of bank accounts and securities (and even motor vehicles in a few states). As long as you live, the named beneficiary has no rights to claim the account funds or the security. When you pass away, all that the named beneficiary has to do is bring his or her I.D. and valid proof of the original owner’s death to claim the assets or securities.

Gifts. For 2013, the IRS allows you to give up to $14,000 each to as many different people as you like, tax-free. By doing so, you reduce the size of your taxable estate. Please note that gifts over the $14,000 limit may be subject to federal gift tax of up to 40% and count against the lifetime gift tax exclusion, now at $5.25 million.

Revocable living trusts. In a sense, these estate planning vehicles allow people to do much of their own probate while living. The grantor – the person who establishes the trust – funds it while alive with up to 100% of his or her assets, designating the beneficiaries of those assets at his or her death. (A pour-over will can be used to add subsequently accumulated assets; it will be probated, however.)

The trust owns assets that the grantor once did, yet the grantor can use these assets while alive. When the grantor dies, the trust becomes irrevocable and its assets are distributed by a successor trustee without having to be probated. The distribution is private (as opposed to the completely public process of probate) and it can save heirs court costs and time.

Are there assets probate doesn’t touch? Yes. In addition to property held in joint tenancy, retirement savings accounts (such as IRAs), life insurance death benefits and Treasury bonds are exempt. Speaking of retirement savings accounts…

Make sure to list/update retirement account beneficiaries. When you open a retirement savings account (such as an IRA), you are asked to designate eventual beneficiaries of that account on a form. This beneficiary form stipulates where these assets will go when you pass away. A beneficiary form commonly takes precedence over a will, because retirement accounts are not considered part of an estate.

Your beneficiary designations need to be reviewed, and they may need to be updated. You don’t want your IRA assets, for example, going to someone you no longer trust or love.

If for some reason you leave the beneficiary form for your life insurance policy blank, it could be subject to probate when you die. If you leave the beneficiary form for your IRA blank, then the IRA assets may be distributed according to the default provision set by the IRA custodian (the brokerage firm hosting the IRA account). These instances are rare, but they do happen.

To learn more about strategies to avoid probate, consult an attorney or a financial professional with solid knowledge of estate planning.

Here are some commonly held assumptions – suppositions that may or may not prove true for you, depending on your financial and lifestyle circumstances.

#1. You should take Social Security as late as possible. Generally speaking, this is a smart move. If you were born in the years from 1943-1954, your monthly benefit will be 25% smaller if you claim Social Security at 62 instead of your “full” retirement age of 66. If you wait until 70 to take Social Security, your monthly benefit will be 32% larger than if you had taken it at 66.

So why would anyone apply for Social Security benefits in their early 60s? The fact is, some seniors really need the income now. Some have health issues or the prospect of hereditary diseases influencing their choice. Single retirees don’t have a second, spousal income to count on, and that is another factor in the decision. For most people, waiting longer implies a larger lifetime payout from America’s retirement trust. Not everyone can bank on longevity or relative affluence, however.

#2. You’ll probably live 15-20 years after you retire. You may live much longer, especially if you are a woman. According to the Census Bureau, the population of Americans 100 or older grew 65.8% between 1980 and 2010, and 82.8% of centenarians were women in 2010. The real eye-opener: in 2010, slightly more than a third of America’s centenarians lived alone in their own homes. Had their retirement expenses lessened with time? Doubtful to say the least.

#3. You should step back from growth investing as you get older. As many investors age, they shift portfolio assets into investment vehicles that offer less risk than stocks and stock funds. This is a well-regarded, long-established tenet of asset allocation. Does it apply for everyone? No. Some retirees may need to invest for growth well into their 60s or 70s because their retirement savings are meager. There are retirement planners who actually favor aggressive growth investing for life, arguing that the rewards outweigh the risks at any age.

#4. The way most people invest is the way you should invest. Again, just as there is no typical retirement, there is no typical asset allocation strategy or investment that works for everyone. Your time horizon, your risk tolerance, and your current retirement nest egg represent just three of the variables to consider when you evaluate whether you should or should not enter into a particular investment.

#5. Going Roth is a no-brainer. Not necessarily. If you are mulling a Roth IRA or Roth 401(k) conversion, the big question is whether the tax savings in the end will be worth the tax you will pay on the conversion today. The younger you are – roughly speaking – the greater the possibility the answer will be “yes”, as your highest-earning years are likely in the future. If you are older and at or near your peak earning potential, the conversion may not be worth it at all.

#6. A lump sum payout represents a good deal. Some corporations are offering current and/or former workers a choice of receiving pension plan assets in a lump sum payout instead of periodic payments. They aren’t doing this out of generosity; they are doing it because actuaries have advised them to lessen their retirement obligations to loyal employees. For many pension plan participants, electing not to take the lump sum and sticking with the lifelong periodic payments may make more sense in the long run. The question is, can the retiree invest the lump sum in such a way that might produce more money over the long run, or not? The lump sum payout does offer liquidity and flexibility that the periodic payments don’t, but there are few things as economically reassuring as predictable, recurring retirement income. Longevity is another factor in this decision.

#7. Living it up in your 60s won’t hurt you in your 80s. Some couples withdraw much more than they should from their savings in the early years of retirement. After a few years, they notice a drawdown happening – their portfolio isn’t returning enough to replenish their retirement nest egg, and so the fear of outliving their money grows. This is a good argument for living beneath your means while still carefully planning and budgeting some “epic adventures” along the way.

Your retirement plan should be created and periodically revised with an understanding of the unique circumstances of your life and your unique financial objectives. There is no such thing as generic retirement planning, and that is because none of us will have generic retirements.

If you fear probate, consider a living trust. If you worry about your will being contested or your heirs fighting over your assets, a revocable living trust may be your best option.

You fund a revocable living trust with all, or largely all, of your assets during your lifetime. The trust owns the assets, yet you can still use these assets while you live. Once you die, the revocable living trust becomes irrevocable and the trust assets are distributed according to your wishes by designated successor trustees, exempt from probate.

In addition to giving you more control and privacy, a living trust may save your heirs time and money. An AARP survey finds that it takes roughly 18 months to distribute the typical estate because of probate. Settlement costs from probate may eat up as much as 5% of an estate.

Living trusts do not reduce taxes. Assets within a living trust are fully taxable at the federal and (generally) state level. Unless someone has drafted the trust to include tax-saving provisions, it will offer no particular estate or income tax advantages to the grantor or the beneficiaries.

Living trusts lead to a lot of paperwork. As the trust has to become the legal owner of your assets to be effective, the title needs to be changed on those assets. That means filling out myriad forms and revising others. Expenses may be incurred along the way.

Living trusts do not relieve trustees of their duties. When a grantor of a living trust passes away, the language in the trust document will not magically “do all the work” for the successor trustee. While a successor trustee will usually not have to deal with probate, other responsibilities remain. Titles will need to be changed and appraisals may be necessary.

A living trust is not necessarily inexpensive. A lawyer may charge you $1,500 or more to create one. If you have significant assets and fear a dispute over your will, it may be worth it.

There are living trust solutions available on the Internet, or via books or software. However, when cutting and pasting boilerplate language and filling in some names here and there, what kinds of legal and financial risks are you taking?

While having a living trust drawn up with the help of an attorney is certainly advisable, paying a fee is no guarantee of competence; amending simple errors could cost you another $300-500.

A living trust is not a will. You still need a will when you have a living trust. In fact, you are probably going to need a “pour-over” will down the road, assuming you will keep accumulating assets after the trust is drawn up. A pour-over will place these stray assets into the trust.

Additionally, you need a will if you want to make charitable bequests or gifts to friends or relatives upon your passing. A living trust cannot carry out these gifts on your behalf, nor can it name a guardian for any minor children.

A living trust is not a living will, either. A living trust does not function as a health care directive or a power of attorney. These are separate estate planning documents. While some families ask attorneys to create them concurrently with a living trust, a living trust won’t stand in for them.

While living trusts are highly touted and can be highly useful, that does not mean every family should get one.

You may not need a living trust to begin with. If your financial life has been largely free of “creditors and predators” and your estate isn’t complex, a thoughtfully drafted, well-executed will could prove sufficient when the time comes. For some middle-class families, a living trust can be like a fifth wheel on a car, seeming to provide stability, but actually unnecessary.

After all, not all assets are subject to probate when someone passes away: IRA, Keogh and pension plan savings, life insurance death benefits, checking and savings accounts that have POD beneficiaries, Treasury bonds, and property owned jointly with the right of survivorship.

In terms of time, often there isn’t much difference between distributing assets via probate and through a living trust. In terms of savings, the filing and court fees that come with a probated will may not be that onerous. While the fees may total a small percentage of the value of the estate, the executor may decline a commission if he or she is a family member and require only hourly legal advice.

A living trust isn’t the only type of trust out there. Some families opt for the testamentary trust. Assets move into this basic, irrevocable trust as directed in a grantor’s will. As the grantor’s will directs the assets, the estate still proceeds through probate but more expediently than usual. Other families opt for more complex and specialized trusts.

As a reminder, this article is intended as an overview of living trusts, and not any kind of legal advice. If you are considering a living trust or another kind of estate planning vehicle, the best “first step” is to talk to an attorney before you proceed further.

When and how did such a controversial idea emerge? It has gained momentum in the past decade, especially in the wake of Robert Kiyosaki’s Rich Dad, Poor Dad. The best-seller contends that while financial literacy is crucial for success, a college education is not. Kiyosaki compares what he learned from his “poor dad” (his father, a Ph.D. who became Hawaii’s superintendent of education yet struggled financially) with what he learned from his hazily identified “rich dad” (a high school dropout who became the richest man in Hawaii). You may be a fan of the book, or you may not be; its popularity can’t be dismissed.

Peter Thiel, the co-founder of PayPal, raised eyebrows in 2011 when he paid 24 collegians $100,000 each to drop out and start up tech firms. In a New York Times op-ed piece that summer, Thiel said that “learning should be done throughout life, and technology creates more ways to learn every year”. He wrote that in the near future, a conventional four-year college education “will be revealed as an antiquated debt-fueled luxury good”. A year after letting the world know that a traditional college education was all but obsolete, Thiel signed up to teach at Stanford University. (He has both a B.A. and a J.D. from Stanford himself.)

Financially, it may be risky to enter adult life without a degree. Kiyosaki and Thiel aside, you don’t find many successful people dismissing the value of a university education. Less-educated people generally earn less than well-educated people.

All you have to do is look at Census Bureau data to see the relationship between education and salary. On page 152 of the 2012 Statistical Abstract of the United States, we find Table 232, Mean Earnings by Highest Degree Earned. It says that in 2009 (the most recent survey year), the average high school graduate earned just $30,627. The average bachelor’s degree holder pulled down $56,665. The average Ph.D. earned $103,054, and those with professional degrees (i.e., law or medicine) earned an average of $127,803.

You get more than earning potential out of the college experience. The traditional, liberal arts-grounded university education gives you a skill set for life – social skills, cultural literacy, and a refinement of critical thinking that is invaluable, in addition to what you learn in your major. The friendships made in college may last a lifetime as well, with a positive effect on your career path. You also have the chance to discover who you are, and to possibly live on your own for the first time.

Does a college degree make that much of a financial difference in life? Just look at the Census Bureau data. Look at the anecdotal evidence everywhere around you. You may not need a college degree to succeed, but it does help your chances.