When I travel the country talking to people about financial planning, one of the most often-asked questions I hear is, "Which should I save for first: my kids' college or my retirement?" My answer is always the same. Put your own financial independence on track first, and then focus on your children.

Why? Because children have options for funding their college education beyond the savings you have set aside — through grants, financial aid, loans and scholarships. With these options and the benefit of time to pay back any loans, a student generally has a greater chance of covering college costs than you do of making up lost retirement savings.


In the past, parents could focus on saving for their children's education since retirement was often taken care of with pensions, 401(k)s and Social Security. Today, most parents don't have that luxury. The burden of saving for retirement has shifted to each of us, which makes financial planning for families more complex than ever.

As you map out your financial planning strategy, make saving for your retirement a top priority. You can still save for your children’s education, but make sure your retirement savings are in good shape and on track before you begin. It's much like the instructions you're given by flight attendants when you travel by air: In case of emergency, put your oxygen mask on first before putting it on your child. If you don't take care of funding your own retirement, you may end up weighing down your kids with that responsibility later in life — a tradeoff that neither you nor they may appreciate.


If your retirement savings plan doesn't leave enough room to fully fund your children's education, consider sharing the financial responsibility with them. It’s good to have kids make an investment in their own education. When children have some skin in the game, they're more likely to appreciate the investment.

In my family, our kids are responsible for coming up with a third of their college education costs by working during their high school and college years, taking out student loans or by getting scholarships — I'm amazed at how many schools offer academic scholarships. So I tell my son, “If you want to play video games instead of studying, you will be paying more out of your own pocket for the portion of your college education that you’re responsible for."

If you don't take care of funding your own retirement, you may end up weighing down your kids with that responsibility later in life.


If you don't already work with a financial professional, find one. You need a person who can give you clear direction and help you understand your options. For example, most people immediately think of a 529 plan when it's time to start saving for a child's college education. That can be a great saving tool, but the money in a 529 plan can generally be used only to fund education, without a tax penalty. What if a child doesn't end up attending college, or you need access to that money for some other reason? There are other vehicles, such as investments or the cash value from permanent life insurance, that can be used in addition to a 529 plan to offer more flexibility. By working with a financial professional, you'll better understand your options and be empowered to make smart decisions based on your situation and your goals.

The bottom line is this: Although your wish may be to fully fund your child's education, don't allow that goal to put your own retirement at risk. One of the best gifts parents can give their children is their own financial independence in retirement.

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