Retirement or Kids’ College: A Not-So-Easy Decision
We’re in the midst of adjusting our family budget to account for some major changes that will be happening over the next couple of months. In the process, everything is getting looked at, including savings. Just like anybody, we have lots of things competing for our dollars. We save a pretty sizable portion of our income right now:
- Retirement
- College
- Short-term savings for known expenses
- Taxable index mutual fund
Since everything is being evaluated, the topic of saving for retirement versus college came up. This should be an easy one. Everything you read says save for your own retirement first and college funds come somewhere lower down on the list. It’s in any personal finance book or blog. Easy.
Only it’s not so easy if your a parent.
Any way you look at it, saving for yourself first seems like putting yourself in front of your kids. And something happens to your mind when a child arrives. You become incapable of putting yourself before your offspring. What’s a positive genetically speaking can be a serious negative financially speaking.
So we’re at a decision point. Which gets reduced and by how much? First, the changes to the budget will be temporary. Second, they may not be necessary at all if things fall right. As things stand right now, though, it looks like they’ll each take a hit. We’ll be saving a little less in each of our children’s college funds and a little less for retirement. It goes against all the personal finance advice I’ve read, but it’s the right decision for us.
Now let’s cross our fingers and hope it won’t be necessary…
December 26th, 2007 at 6:30 am
You can’t take out loan for retirement but for college you can is another thing that alot of us hear. We are saving for retirement and putting away some for college for each child-however my children will probably be going to state schools which is fine in my opinion. My husband and I both got help from our parents and attended state schools-luckily neither one of us had any student loans after we graduated.
Another option is to do a Roth IRA-you can take out the contributions at any time so you can help pay for college but keep the earnings for your retirement.
December 26th, 2007 at 12:47 pm
One way to help is to do your best to raise smart kids and help them apply for scholarships and the like. You can’t count on them, of course, but if your kids apply to lots of colleges and lots of scholarships, they’re likely to get something.
Saving for college is good, too. But as has been said–you can’t take out a loan for retirement. And while you can retire cheaply, you can’t do it at a state school or community college or on scholarship. I think…
December 26th, 2007 at 10:07 pm
I tend to agree with Frugal Momma and Mrs. Micah (how does she comment so much!?), but… you do need to follow your conscience.