Often, clients are willing to forego saving for retirement (under the guise of postponing it) in favor of saving for and financing their children’s higher education. This is a dangerous game to play, though, and one that is not recommended.
With advancements in health care and increased lifespans, coupled with decreasing home and investment values, outliving your retirement is a very real possibility without proper planning.
I understand that for many families, you may not be able to save for both retirement and college simultaneously. However, you should not put your future (in terms of your retirement) on the line to cover college expenses for your children. I hear your arguments, and yes, children are the future, but just don’t do it.
Why? For starters, you can get loans to cover college expenses; you cannot get loans to cover your retirement expenses.
Additionally, when you’re funding your retirement savings, those vehicles may be more tax friendly and you still have access to that money down the road. For college savings, it is very specifically for college expenses only.
The best plan? Continue saving for retirement. In fact, save as much as you can for retirement. Then, when the kiddos start coming along, start saving for their educations as early as possible (i.e. when they’re babies), so the amount may build incrementally as they grow up. If your kids are older now and you’re already staring at the prospect of college expenses, thinking that you should have started sooner, don’t fret; there are still plenty of options available to you. Be sure to contact your financial advisor for more information on formulating a plan for your situation.