College Funding or Retirement?

For most people, investing in mutual funds is quite straight forward, as you might have some particular goals that need to be met. You and your partner are might however be approaching mutual fund investing with your eyes open and are both on the same page. Of course, your wife might want that pretty cottage down by the lake and you might want that new speedboat, but both your goals might more generally involve the same thing, and that’s close enough for you. But what if you’re in a completely different boat? What if you know that you need to invest, but you have two equally important goals pulling you in two separate ways? This is the case with thousands of parents who see the need to save for retirement but also want to save for their kid’s college education. How can you do both at the same time?

Here are a few tips:

One of the biggest factors in the college vs. retirement battle is the fact that these days, people are putting off having kids until later in life. Fifty years ago, this wasn’t the case, and saving for both college and retirement usually happened during two distinctly different phases in one’s life. These days, people tend to realize that saving for retirement is something that should be started when they’re 18, not 48.

The gut instinct of most parents is to put the kids’ future ahead of their own and cut back on retirement savings and prefer college funding. While this might be a popular choice, it really only should be a last resort. A technique that is becoming increasingly popular with parents who face saving for both at once is offering your children the opportunity to get matching funds from you. This is simply the idea that for every dollar that they pay for, you’ll match it. If you’re not sure how junior will pay for half, remember that there are many ways for teenagers to save for college by themselves. Almost everyone does qualify for student loans, there are scholarships for all students as well as the possibility for after school and summertime jobs. Most college students work while they are attending classes, as well.

While walking the tightrope of saving for two goals at once can be stressful, a logical and determined approach to the situation is really the only way for you to go. Choosing retirement over your kids’ education isn’t a “bad” choice, and neither is choosing college over retirement. Everyone’s situation is different and you need to make the right choice for your own situation.

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