Saving for your own retirement or your kids’ college: which one should come first? In this video, Financial Educator Jason Thomas offers four reasons it’s important to save for your retirement before you put money away for your children’s college education.
So should I save for my own retirement or my kid’s college first? This is on the mind of a lot of investors. It’s a difficult decision, so what way do you go?
In an ideal scenario, we’d all be able to fund our own retirement as well as college education for our children, but there’s often a need to prioritize one or the other at any given time. So how do you choose? Most financial professionals would agree that you want to save for your own retirement first and there’s a number of reasons for this. First off, there are other ways to pay for college. There are grants, loans, work-study, scholarships, and additional sources that might be available to assist in the cost of college, while retirement must be funded.
Also, college is four years. Retirement can be over 20 years easily. This hurdle is steep for retirement savings since it’s a larger goal to fund. You need to devote an appropriate amount of attention to this substantial long term goal.
Also, financial independence in retirement is probably a better gift for your child than a fully funded college experience. What is the alternative, to rely on your adult child’s assistance in retirement? Also, many retirement accounts may have tax advantages that are more beneficial than college savings plans.
Once you have successfully funded your own accounts, consider additional vehicles to save for your children’s education such as 529 accounts or other types of investment vehicles. But make sure you’re looking out for your own retirement first. If you have any additional questions please contact us at PureFinancial.com. Thanks for listening.