As a parent, you are used to putting your children first. Their sports schedules often come before your weekend plans. You plan vacations around the school calendar and summer camp. You cut back on dining out and movie nights to help pay for music lessons or tutoring. Still, there are times when it is just as important to think about your own future.
Choosing between saving for retirement and paying for your children's college education can feel like another moment to put them first. But there is another way to look at it. When you focus on your retirement, you are also helping your children.
College & Retirement Costs: An Education
College costs have been rising faster than inflation, according to the College Board. That gives many parents reason to pause. The total cost of college can vary widely depending on the school and location.
The average published annual tuition and fees for in-state students at a public four-year college is just over $11,950. The average published annual tuition and fees at a private four-year college is more than $45,000.1 These figures do not include room and board.
Retirement is different. It does not come with a set price, and it can last decades. The amount you may need depends on several factors:
- Your desired retirement lifestyle
- Your current income, budget, and financial obligations
- Your short- and long-term savings goals
- Your retirement savings timeline
In general, the earlier you start saving, the more time compound interest has to work for you. With steady saving and clear goals, you can build a strong foundation for your retirement years.
The Case for Putting Retirement First
Many parents want to help cover college expenses. But it may not be possible to fully fund both retirement and college at the same time. If you retire without enough savings, your children may need to help support you later in life.
You cannot borrow money to pay for retirement. There are loans for college, but not for your later years. By preparing for retirement now, you reduce the chance that your children will face added pressure in the future. Taking care of yourself today can ease their responsibilities tomorrow.
Options for Paying for College
When you step back and look at the bigger picture, you may see that there are many ways to pay for college. While student loans or part-time work may not seem ideal at first, they can help students take responsibility for their education. They can also build skills such as budgeting, time management, and independence.
Here are several options that may help manage college costs:
- 529 College Savings Plans: These tax-advantaged accounts allow families, including grandparents, to save for future education expenses.
- Student loans: Students may apply for federal and private loans. Families must complete the Free Application for Federal Student Aid (FAFSA) each year. The FAFSA helps determine how much parents are expected to contribute.2
- Scholarships and Grants: Schools and other organizations offer scholarships and grants based on need, academic performance, athletics, or other achievements. The U.S. Department of Labor provides a scholarship search tool that can help students find opportunities.3
- Employment: Students may work part-time or full-time while attending school. Some employers also offer tuition reimbursement programs.
- Community College: Starting at a two-year college can lower overall costs. Students may later transfer to a four-year school. Living at home can also reduce expenses.
It is also helpful to know that retirement savings are not counted when the FAFSA calculates a parent’s expected contribution. Your retirement accounts are not included in that review.
Final Thoughts
Deciding between retirement savings and college funding can be difficult. However, building a strong retirement foundation can support your family in the long run. By preparing for your future, you help reduce financial strain later and give your children greater freedom to focus on their own goals.
Sources
- Trends in College Pricing: Highlights. https://research.collegeboard.org/trends/college-pricing/highlights.
- Complete the FAFSA® Form. https://studentaid.gov/h/apply-for-aid/fafsa.
- Scholarship Finder. https://www.careeronestop.org/toolkit/training/find-scholarships.aspx.
