Funding Retirement Versus Your Children’s College Education
Leisl L. Langevin, CFP®, CDFA®
Senior Vice President & Financial Advisor
As many parents start ramping up their retirement planning efforts, their kids are also preparing for an important next step in life: higher education. It may seem overwhelming to manage both at once – especially if you’re still paying off your own student loans – but it’s important to make some hard decisions sooner rather than later so you can plan well for both goals.
If you’re thinking about tapping into your retirement accounts, ask yourself a few questions: Is this a sacrifice I can afford to make? Are there other ways to get the money we need? How much is my kid willing to contribute?
It’s no secret – college is very expensive, whether your kid attends a university close to home or in another state. According to the College Board, the average cost of tuition at four-year private universities is up to $33,480. After room and board, you could possibly spend about $45,000 a year or more. Although in-state universities may be cheaper, the expense is still great.
Putting a Plan in Place
One of the first things to do after evaluating the costs of tuition is to consult with a financial planner. They will help you assess your goals, look at your current retirement plan, and provide objective, realistic advice on whether or not your finances can meet your expectations. Don’t feel embarrassed if there’s a shortfall – this is a very common financial challenge that I help clients with often.
Many families find it easy to consider tapping into retirement savings to fund their children's higher education, but that may not be the best alternative. While evaluating your financial standing, you may realize your retirement savings can’t withstand such an expensive hit and you need to look at other options. Now is the time to draw your children into the conversation and make decisions as a family.
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Avoiding the Guilt Trap
Parents always want the best for their children, and our modern society even shames parents that are not able to put their kids through school, or willing to sacrifice their own retirement. As the cost of college continues to rise, your kids should take a vested interest in their education and be willing to contribute.
Think about this – what if you paid for a very expensive college and your child decided that’s not what they wanted to do anymore? You’ve wasted precious retirement dollars that you may not be able to replace.
Most financial advisors tell parents to prioritize retirement savings for good reason. You can borrow funds to pay for college, but nobody lends money for retirement.
Younger millennials and Generation Z have reshaped the notion of college and tend to make their own rules. Having a stake in their own future will be meaningful, helping to take some of the burden off of you. Being practical about the situation and empowering your child to make a commitment to their education teaches responsibility and guidance for the future.
Working with a financial planner can also help you and your children to set goals and offer solutions where everyone can have a vested interest in paying for college, without compromising your retirement. In today’s economy, being strategic and attempting to avoid touching your retirement is very important.
If you’d like help creating a strategic financial plan that will best serve all of the important goals that you have for yourself and your family, our team at Weiss, Hale & Zahansky Strategic Wealth Advisors can help. We use our strategic Plan Well, Invest Well, Live Well™ process to help our clients do just that every day. Contact us at (860) 928-2341 or info@whzwealth.com to get started.
Presented by Senior Vice President, Financial Advisor, Leisl L. Langevin CFP®, CDFA®. Securities and advisory services offered through Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Adviser. These materials are general in nature and do not address your specific situation. For your specific investment needs, please discuss your individual circumstances with your financial advisor. Weiss, Hale & Zahansky Strategic Wealth Advisors does not provide tax or legal advice, and nothing in the accompanying pages should be construed as specific tax or legal advice. 697 Pomfret Street, Pomfret Center, CT 06259, 860.928.2341. http://www.whzwealth.com
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