Can you Save for Retirement and Pay for your Kids’ College Simultaneously?

While there’s nothing wrong with parents who focus on their kids’ goals with regards to college, research has indicated that more and more parents are now doing this at the detriment of their own retirement. Although it’s OK to provide support to your kids while they’re in college, it can be extremely difficult to balance that along with your own plans to retire in a decade or two. 

Firstly, it’s crucial to determine how much you will be able to comfortably set aside for your own retirement as well as your kid’s college costs. All of these expenses must be considered in conjunction with each other so that you can see where changes might need to be made to one or both of them. 

Here are some questions that require honest and direct answers because they will help you determine what your financial limitations are:


Covering College Expenses

  • Are you going to pay for all or part of your child’s college journey?
  • How many years are left before your child starts college?
  • Will they attend public or private college?
  • Do you think your kids will qualify for any form of financial aid?
  • Will grandparents or any other family members be contributing towards college costs or not?
  • If your kids have specific academic, artistic or athletic abilities, id there a chance that they would be able to qualify for any scholarships?


Covering Retirement Savings

  • How do you want to live after you’ve retired? Do you want to simplify your life or would you like to travel more?
  • Does your current employer offer any form of retirement or pension plan where matching contributions are provided?
  • How many more working years do you have left before reaching retirement?
  • Will you or your spouse still work part-time after officially retiring or not?
  • Have you already got a Roth IRA or other form of IRA in place?
  • Are you going to need Social Security benefits to assist with your retirement? If so, it’s essential that you check online to see the amount you’ll qualify to receive
  • What sort of income are you expecting form your existing retirement account balance?


What you can do if it’s not Possible to Pay for College and Retirement

In cases where it’s just not possible to pay for college and secure your retirement financially, you might need to ask:

  • Will you be content with delaying retirement by a few years in an effort to boost savings balances?
  • Are you willing to cut back on living expenses now or after retirement? You may be able to reduce expenses right away in order to have enough money later on or you can think about reducing spending once you’ve retired
  • Are you willing to keep working into your retirement years?
  • Will you be willing to make investments that are more aggressive? (This might not always be a good idea)
  • Will you be willing to have your kids attend more affordable colleges or contribute towards their college costs?

It’s essential that you not wait until your kids have finished college before you start saving for retirement because it will be almost impossible to save enough money to live on. If you require more information about being able to retire comfortably and still contribute towards your kids’ college education, get in touch with us today.