Especially for parents who had their children when they were in their 30s or later, the crunch of paying for college while trying to save for retirement can be tough to manage. The Family CEO gives advice for families who find themselves in this situation.
Reduce other expenses to free up cash for these goals.
… It might be something big, like driving a car with high payments. Or something small, like have premium cable channels that you never watch. Big or small, eliminating some of these expenses and directing them to retirement or college savings can help you meet those goals.
I have neighbors who put their kids through college debt-free using this strategy. Exercising great discipline, they gave up one of their cars, fancy vacations, most clothing purchases, and housecleaning services during the six years they were paying college tuition. It’s certainly not easy, but it can be done.
Create new streams of income or boost the ones you have.
In some cases this is quite feasible – consultants can take on extra clients, teachers can tutor on the side, SAHMs can go back to paid employment. But sometimes it’s hard to find new money, and even then the amounts are meager. The whole family can get in the act; maybe a teen can earn spending money from a summer job.
If you need to choose one, choose retirement.
… there are multiple ways to pay for college, but no one is going to fund your retirement for you.
Since time is not on their side, older parents in particular should avoid skimping on their retirement savings. It can be a hard decision for parents to put their needs above those of their children, but here’s one way to think about it.
It’s like putting on your oxygen mask first on an airplane. Make sure you’re taking care of yourself, so you can in turn take care of them.
- Paying student loans in your 20s, 30s, and beyond interferes with saving for retirement (Cost of College)
- Your retirement savings are not included in determining EFC (Cost of College)