As a parent, you want to provide the best opportunities for your children. However, funding your child’s education often comes at the expense of saving adequately for your own retirement. This difficult balancing act can leave parents financially unprepared later in life if not handled carefully. In this post, we’ll explore strategies to balance these competing priorities.
The Strong Desire to Support Children
It’s natural for parents to feel that no sacrifice is too great when it comes to their child’s future. The instinct to support their education is strong. But as financial advisors, we have seen people severely jeopardize their own retirement by over prioritizing college savings for their children. While well-intentioned, this approach can backfire down the road.
Secure Your Future First
A more balanced strategy is to first secure your own financial future through retirement savings and debt reduction. This provides a solid foundation. Once your retirement plan is on track, you can redirect any additional funds to college savings if possible.
Working with a financial advisor brings an objective third-party perspective. They can analyze your total financial picture and run projections to see if your current savings trajectory will adequately support both college and retirement goals. If the analysis shows a gap, the advisor can provide strategies to address it, like working longer or reducing college costs.
Creative Ways to Reduce College Costs
With proper planning, children can take responsibility for reasonable student loans rather than derailing your retirement. There are also creative ways to reduce college costs, such as starting at community college, choosing an in-state public school, living at home, or accelerating high school credits. Don’t go into long-term debt for their education at the expense of your own financial security.
Think of the Airplane Oxygen Mask Analogy
As they say on airplanes, secure your oxygen mask first before assisting others. This analogy holds true when balancing retirement savings and college costs. Take care of your own needs first, so you are not a financial burden to your children later.
Find the Optimal Middle Ground
The bottom line? Be smart about balancing these competing priorities. With some compromise and creative thinking, you can find an optimal middle ground. Your child can still get quality education without extreme financial stress on your retirement plans.
If you need guidance finding the right balance for your situation, please reach out. We’re here to help you make informed decisions to benefit your entire family.
