Your children come first; that’s just the conditioned nature of being a parent. But what is the best way to save for your child's college education while saving for your own future? Learn how with these investment options.
Balancing college expenses and saving for retirement can be challenging. Remember, though, that you can get a loan for college, but you can’t get one for retirement. So, while children can turn to student loans, grants, scholarships, and part-time jobs to fund their education, parents are limited to their savings and investments to fund retirement.
Unfortunately, most parents are only too willing to sacrifice their own retirement security for their children’s education. Many opt to tap into their retirement savings or delay retirement to cover college expenses.
Parents should learn the various education fund savings vehicles. Your financial services professional can work with you to set a budget for what you can afford, after factoring in the necessary retirement savings. Here are some popular options for getting a head start on saving for college:
As noted earlier, the best way to accomplish the dual goals of paying for college and saving sufficiently for retirement is to work together. The earlier you invest in a college savings plan, the better. But there are all sorts of strategies for making college more affordable:
Although there are many ways to save and pay for college, the options for saving for retirement are not that plentiful. In fact, the following three examples highlight ways in which retirement savings are being eroded, which places those who choose their children’s education over their own retirement in a precarious position.
Just know that your focus as parents is to prioritize your retirement savings. Because, without a substantial nest egg, you could become a burden on your children when you’re older. If your kids see you placing retirement first, it may teach them about the importance of saving for their own retirements. That could end up being the best payoff of all.
1Please note that accessing the policy’s cash value will reduce the policy’s death benefit and available cash surrender value.
2Farran Powell and Emma Kerr, “What You Need to Know About College Tuition Costs,” U.S. News & World Report, September 20, 2020.