As both the costs of college and the cost
of retirement rise, at some point you will probably step back and ask yourself,
“How can I possibly save for retirement while still putting away money for my kids’
You hit a crossroad where you want to provide for your children,
but also want to make sure you can retire comfortably.
Now comes the hard truth; planning for
your retirement is a more pressing matter than funding your children’s education
for a multitude of reasons.
can always fund education from other sources besides savings, such as
scholarships, grants, and even loans. On the other hand, your retirement cannot
be funded by scholarships or loans.
student loan rates are generally lower than what you can make by putting money
in retirement investment.
federal financial aid formula ignores assets in tax-sheltered retirement plans
but assesses up to 5.6% of other parental assets so it might harm your
student’s chances for financial aid if you have too many assets outside of
So we recommend that before you put any
money into college savings, you should ensure all of your retirement savings
goals are being met. Additionally, by forgoing tax-favored retirement accounts,
such as a 401(k), you not only miss out on any employer match but also lose the
tax benefit and opportunity for long-term growth that these accounts offer.
Still, it is very possible to save for
both retirement and college. The best way is to start planning for both
education and retirement early. This way you can put a little bit away at a
time and allow your savings to gradually build through the years. The ‘Rule of
72’ tells us that time is your most valuable asset and compound interest is your
The ‘Rule of 72’ applies to both
retirement and education savings. So if
you do want to do both
start early and
to take full advantage of your most important factor:
Even if you missed out on saving early
but want to strive to meet dual goals, or just want to see how you may be able
to save and grow your money more effectively, we are here to help. We value
education, but also realize the importance of security in your retirement. We will build a personalize plan with you to help you realize your retirement
goals and further discuss the feasibility and options for simultaneously saving
for your children’s education.
Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Investing involves risk and investors may incur a profit or a loss.