Retirement vs College Savings
Some people are faced with this very real decision – do you start saving for Little Johnny’s college tuition, or do you focus on your own retirement first?
Before you know it, that sweet little baby of yours will be all grown up and graduating high school. Unless you plan ahead, it’s all too likely that you will be part of the majority of American families who do not have a college savings plan in place. According to a Sallie Mae study, only 39% percent of families have a plan to pay for college tuition.
But something to keep in mind is that you can view your savings as an investment in your child’s future. The New York Times released a study that showed Americans with four year college degrees earned 98% more per hour than workers without degrees.
On the other hand, more than half of Americans lose sleep thinking about retirement. This is mainly because they face the uncertainty of what lies in the unknown great beyond, across the River Retirement. Studies show that people who are confident about their retirement have a clear goal and vision for their future.
And the stats aren’t very comforting in terms of retirement savings. 45% of Americans have saved nothing for retirement, including 40% of Baby Boomers.
One solution is to focus on preparing for what you child will be following as a career. For example, if they have expressed interest in becoming a teacher, a graphic designer, a music composer, or some other vocation that requires specific technical training, then sending them to Harvard is pointless.
Saving for retirement should generally take precedence over saving for college. Besides saving separately for college or setting up a family savings account for the tuition, there are always scholarships and student loans as an option. But you cannot take a retirement loan, last time we checked.
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