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5 Tips to Juggle Retirement and College Savings
Article written by Scott M Kahan in Hamlet Living - April 2022 Magazine
Perhaps parents’ two most significant financial goals are comfortably retiring and sending their children to college. However, allocating funds for both simultaneously can cause financial stress and fear. Here are five tips that make fulfilling such lifetime goals far from an intimidating experience.
1. Your Retirement Should be the Priority
While trying to save as much money as possible for your children’s education is an honorable endeavor for any parent, you should not sacrifice your retirement in the process. Keep in mind that there are always scholarships, loans, and grants available to help your children connect the financial dots.
Consider a secure financial future for yourself as one of the best gifts you can give your children. They will inevitably accrue their debts as adults (cars, homes, college for their children, etc.). On top of everything else, they shouldn’t have to worry about your financial footing during retirement. Set aside money for your children’s college education, but do not neglect to save for your future as well. Make sure to fund your retirement plans each year fully.
2. Start Saving Early For You and Your Children
Whether it is your retirement or your children’s college fund, the sooner you start, compound growth is the fuel that powers a successful savings account of any kind. An excellent place to start is by opening a 529 savings account (www.NYSaves.org) when your children are young and regularly contributing to it as they age. Investing this way will provide tax-free growth for college.
3. Look into Scholarships and Grants
Scholarships and grants are reserved endowments. In the United States, thousands of students attend college each year thanks to the programs available. Do not be deceived into thinking your chil - dren have to be geniuses to qualify for such awards, either. Money aided to students is based on several different qualities. And, if your kids apply for admission to schools where their grades put them in the top quarter of the incoming class, they may be eligible for merit-based aids that provide tuition assistance.
4. Never Cash Out a Retirement Savings Fund
One of the biggest mistakes parents can make is cashing out their retirement savings fund. Sacrificing your financial future to put your children through school is not the answer. In the long run, your fiscal health is damaged, and that of your children if they end up having to pick up the slack by paying your bills. Children will have the ability to make more money once their college education is over. Your retirement funds are there for you when you no longer have a steady paycheck.
5. Teach Financial Responsibility
If your children end up using loans to pay for some of their schooling, use it as a teaching tool. Give your children the opportunity to learn lessons about financing and debt, so they develop a healthy relationship with money and respect for credit. Implementing responsible fiscal habits early on will only pay off in the end. Teaching your children through example is the best gift you can give them before sending them out to the world to make their own financial decisions, undoubtedly having a lasting effect on them.
As you begin to plan for your child’s future, remember that your retirement is equally important. Above all else, you want to enjoy your future with a healthy income and watch as your children flourish in their careers and their own families. You should consider the steps to achieving each goal with the other in mind.