Retirement or College Tuition: Which Goal Comes First?

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Retirement or College Tuition: Which Goal Comes First?

Saving for retirement versus paying for college tuition?

For those of us who are parents or legal guardians of school-age children, this is one of the most loaded questions we ask ourselves during our professional lives. At The Humphreys Group, we realize the answer isn’t necessarily clear cut: Is it “either/or”? How about “both”? Additionally, underlying myths and incorrect assumptions about women’s investment abilities may influence the choices our clients consider when grappling with this question.

Our advisors have written extensively about our belief that women possess unique financial, investing and goal-setting skills. We encourage our clients to explore their life and work values, in ways that will help inform both their personal and professional long-term goals and strategies. This includes those that relate to saving for retirement and paying for college.

As you aim for success in your financial planning — specifically your own retirement, your children’s college or both — we offer these additional action steps, and recommend you continue discussing your long-term financial strategy with your advisor:

Explore multiple ways you (and your children) can pay for college

This includes savings plans (ESAs, 529 plans and others); loans (government and private sector); grants; scholarships; on-campus work-study programs and off-campus part-time employment.

Understand how you will afford retirement

Retirement lasts many years longer than the typical amount of time it takes a child or children to finish college. As the amount of money parents contribute to higher education costs continues to rise, it is increasingly important to know just how your retirement may be affected if you shift some of your savings toward paying for college.

Keep doing your math homework

Other advisors stress the importance of calculating accurate estimates of both retirement costs and higher education expenses — and doing so with your potentially college-bound children as they prepare for life after high school. Should they choose the college-route, it will help them make decisions about the schools they’ll apply to. And while they are on that path, continue to discuss finances (annually at a minimum) to help them manage any education debts they personally acquire along the way.

Make informed decisions about your priorities

Many advisors note you can save for both retirement and college. But they stress the reality that money is a somewhat finite resource for most of us; at some point, either retirement or college will naturally become a priority. Suggestions include funding 401(k) plans for employer matches and contributing the cash boost that comes from any raises toward retirement, while also establishing a college savings plan for your child to which you and other family members can contribute.

Questions about retirement and college savings are not particularly easy to answer. Financial subject matter experts have much to say on the subject, and many people wrongly assume looking out for yourself in your later years means you are selfishly putting your own well-being before your child’s. But at The Humphreys Group, we believe the answers you find and whatever strategies you develop should belong to you. They ultimately should also empower you.

Our experienced advisors are unwaveringly confident in our clients’ abilities to clarify their values and determine their priorities so that they can undertake investing behaviors that help them meet their goals. Contact us today to learn more about how we can help you approach saving for retirement and paying for college with a strategy uniquely your own.