Pay for College, Save for Retirement – How Can I Possibly do Both?


Most parents want to help their children cover the expense of a college education (unfortunately, not all feel this way!) AND they also want to experience a comfortable, affordable retirement.  With the incredibly high cost associated with earning an undergraduate degree, how can a parent do both – balance personal financial goals against the educational aspirations of a child?

We offer these tips to help guide you in this seemingly impossible task…

Tip 1: Make the goal of funding your retirement equal to or greater than funding your child’s education.

While funding a college education is important, retirement savings is equally important, if not more so.  Strive to save 10%-15% of your income for retirement.  College is 4 years, while retirement can be 30+.

Tip 2: Discuss the expense of an education with your children.

Be sure your children understand the overall cost of an education and what you are willing and able to contribute.  Help them research funding opportunities, whether through financial aid or scholarships.  Remember – the goal is the “best fit” for your child for the greatest value.  Don’t let “sticker price” scare you or prevent your child from applying.  Some private schools offer quite a bit of free money.  Don’t assume.  And. keep all options open.

Tip 3: Don’t take on more than you an afford.

Be sure you’re not setting your child up for failure when they graduate.  While researching loan possibilities, ensure they will be able to cover payments after graduation.  A good rule of thumb for your child – don’t assume debt in excess of the projected annual salary upon graduation.

Tip 4: Consider the college savings plan that is best for you.

Some advisors suggest 529 plans, others a Roth IRA.  While each has some advantages, each has a serious disadvantage.  While one or the other may benefit a specific family, there is a third option rarely discussed that offers many, if not all, of the same advantages, with none of the disadvantages.  You’ll need to schedule a free, no-obligation evaluation with us to learn about that third option!

Tip 5: Don’t become the “Bank of Mom & Dad.”

While you want to help your kids, be sure not to set the precedent that it’s ok to ask mom and dad for money.  Doing so may make it easier for them to approach you later in life for funds.  Help them become independent of you financially so you can happily enjoy the golden years of retirement!

Our family-specific college planning campaigns account for not only the expense of a college education, they also consider satisfaction of mortgages and income in retirement.  Contact our Professional College Planners today to begin your college planning campaign!


0 replies

Leave a Reply

Want to join the discussion?
Feel free to contribute!

Leave a Reply

Your email address will not be published. Required fields are marked *