Juggling Retirement And College Savings

Juggling Retirement And College Savings

Juggling Retirement and College Savings
Most parents want to​ pay for their children’s college education, or​ at​ the very least help pay for college .​
While it​ would be great for your children to​ be able to​ start like after college without student loans to​ pay off, the cost to​ parents may be too high.
The average annual cost of​ a​ 4-year public college is​ $12,127 (source: The College Board’s Annual Survey of​ Colleges, 2018-2018), with 4-year private schools averaging $29,026 a​ year .​
College costs have been outpacing inflation by rising over 5% per year.
On the other hand, saving for retirement has become even more important as​ companies have started freezing or​ eliminating pension plans, and the future of​ Social Security continues to​ be uncertain.
Paying for both college and retirement will be challenging for most parents .​
Here are some suggestions to​ help you to​ achieve both goals:
• Have a​ plan .​
You should determine how much you will need for retirement and how much you anticipate your children will need for college .​

• Start saving as​ soon as​ possible .​
Time is​ your greatest ally, whatever your savings goal .​
Figure out how much you are able to​ save each month, and setup an​ automatic plan as​ soon as​ possible.
• Prioritize – if​ you can’t afford to​ save for both goals, retirement should take priority over saving for college .​
Your children can always borrow for college or​ earn scholarships; you can not borrow money for retirement.
• Save for both .​
Ideally, you’d like to​ be able to​ save for both goals at​ the same time .​
If you’re able to, allocate money to​ both goals .​
You may wish to​ visit with a​ financial planner to​ determine how much should be allocated to​ each goal.
• Research – there are several different types of​ college savings accounts available .​
Find out which type of​ account will benefit you the most before you invest.
• Use retirement accounts to​ save for retirement and college .​
Retirement accounts can be tapped into to​ help pay college bills (IRA withdrawals can be taken penalty free for college expenses; Roth IRA contributions can be taken penalty and tax-free) .​
However, you should only do this if​ it​ will not sacrifice your retirement savings.
The bottom line to​ getting the most out of​ your savings - prioritize your savings goals, have a​ plan in​ place, and start early.

You Might Also Like:

No comments:

Powered by Blogger.