The cost of college is nothing less than daunting. For parents, watching the college price tag go up every year can lead to a serious financial planning dilemma: Should you save for college or your retirement? The answer is a deeply personal choice that each parent will have to make on their own. It’s also not an all or nothing proposition. However, from an objective financial planning standpoint, there is a clear answer: You should prioritize saving for retirement over college. Here’s why:


When you save for college over retirement, you may give your children the gift of no debt, yet still burden them in the future — because there aren’t loans to pay for your retirement. It’s sort of like the announcement they make on airplanes about putting your oxygen mask on prior to your children's masks. If you pay for their education at the expense of your retirement, they may end up having to support you in the future.

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But when it comes to paying for college, your children will have a myriad of options. They can work, apply for grants and scholarships and take loans. In addition, they may decide to go to a less expensive (but just as valuable) school.


While it would be great to send your kids off to school without a worry financially, it may actually be a good lesson for them to have some skin in the financial game. In fact, some parents make the deliberate decision that their child will have to contribute to a certain percentage of their education. This can be the motivation your child needs to get good grades so that they can get scholarships to lower what they will ultimately have to contribute themselves. If they do have to take out loans, the process can serve as a valuable lesson about debt, money and finance. It’s also more likely to make them factor cost into their decision about what school to attend.


The answer is typically that you can do both. But make sure you have a plan for your retirement savings in place first. A financial advisor can help you ensure you’re doing the right things for your retirement and then help add college savings into your financial plan. Parents typically use 529 accounts to save for college as they offer tax advantages. But there are also drawbacks as the funds must be used for education or you may owe a penalty. Your financial advisor can show you alternative funding sources as well, including the cash value in permanent life insurance.

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