Save for College or Retirement?
Is it possible to save for retirement and your kids’ education at the same time? According to Walter Updegrave, it’s possible, but you really should prioritize instead of trying to do everything at once…
I think most people have enough trouble just saving adequately for their retirement. Throw in college education and it just becomes too overwhelming. Too often the result is that people don’t address either goal adequately, or they get so discouraged that they sometimes give up altogether, figuring it’s hopeless.
That’s why I recommend that people avoid trying to do too much and, instead, adopt a realistic saving plan that focuses on the most important goals first and then moving on to secondary ones.
He then goes on to rank things as follows:
(1) Emergency fund
(2) Stuffing your retirement accounts with as much money as possible
(3) Everything else (including education)
This is pretty sound advice in my book. As they say, you can’t borrow for retirement, so make sure that’s taken care of before you start saving for other things.
Source: CNN/Money
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Modified on April 23rd, 2009 - 4 Comments
Filed under: Education, Retirement, Saving & Investing
About the author: Nickel is the founder and editor-in-chief of this site. He's a thirty-something family man who has been writing about personal finance since 2005, and guess what? He's on Twitter!
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October 4th, 2006 at 2:26 pm
Pretty much all I can afford to do at the moment is put enough in my 401(k) to hit my employer’s match and max out two Roth’s (plus saving for a car, finishing the basement and some stuff like that). So, I figure if I have to pay for college for the kiddo, I can pull out of the Roth accounts. And, if I don’t, then they’re sitting there for retirement.
October 4th, 2006 at 7:36 pm
We have set a modest goal of saving for one year’s tuition at our state university’s main campus for each of our children, using prepaid tuition. It will provide a significant leg-up for our kids without dragging us down. Moreover, the plan is flexible; they can spend it at a cheaper school and get more time out of it.
October 9th, 2006 at 9:00 am
Retirement before college, I worked 55 hours a week and still went to college. Working and going to college is not a bad thing.
March 17th, 2008 at 9:53 am
I’m not someone who refuses to help their kids through college, but neither do I feel obligated to, or think that a college degree is essential. I paid for college with loans and money from the military. Neither of those were bad decisions. And no one truly needs a big-name school. The results of a college education have a lot more to do with the person being educated than with the school doing the educating. I plan to raise kids that don’t need to go to college to have successful lives and careers, but who probably will because it interests them.
I have a relative who knew he wasn’t the college type, so he’s worked for UPS since he was 19. As a result he’s had about a five year head start on earnings, and as you know that can make a crazy difference. College isn’t for everyone, and spending that kind of time and money just because you think you are supposed to is a terrible purchasing decision. That is the best advice I can give on this topic: treat college just like you would treat any other purchase. Including the evaluation of whether or not to purchase it at all.