Saving for Retirement or College
If you could put your energy into one or the other, would you focus on your retirement planning, or planning for your children’s college tuition? Some people are faced with this very real and difficult decision.
Before you know it, that sweet little baby of yours will be a young adult graduating high school. Unless you plan ahead, it’s very 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. The stats aren’t very comforting in terms of retirement savings. 45% of Americans have saved nothing for retirement, including 40% of Baby Boomers
This is mainly because they face the uncertainty of what lies in the great unknown beyond. Studies show that people who are confident about their retirement have a clear goal and vision for their future.
One solution is to focus on preparing for what your child will be following as a career. For example, if they have expressed interest in becoming a teacher or 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 can’t take a retirement loan, last time we checked.
IMPORTANT DISCLOSURES
Material contained in this article is provided for information purposes only and is not intended to be used in connection with the evaluation of any investments offered by David Lerner Associates, Inc. This material does not constitute an offer or recommendation to buy or sell securities and should not be considered in connection with the purchase or sale of securities.
To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law.
Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances.
David Lerner Associates does not provide tax or legal advice. The information presented here is not specific to any individual's personal circumstances. Member FINRA & SIPC