It’s a battle that many families face: save for retirement, or fund a child’s education? For a lot of families, education is a very high priority. Many parents struggled to put themselves through school and they simply want to remove that barrier for their child. It’s admirable and shows love. Financially, though, it may not be the best choice.
Let’s face it, higher education has become expensive; prohibitively so for many students. The idea of paying for or greatly defraying that cost by socking away money for your youngster from an early age is very appealing. But it may not be the best financial move you can make.
Ask yourself this: do you want your child to be the one who helps you bathe and go to the toilet in your old age? Most likely not. And your child, even though they love you, most likely doesn’t want to be your caretaker either.
For the vast majority of people, the point is they should save for their own retirement and potential long-term care needs first. Your goal should be to save at least 15% of your income, or more, over the course of your working life. Max out retirement plans and IRAs that you are eligible for, have a cash savings, and even a taxable investment account. Get your financial house in order as a first priority. Hit those targets first and then consider saving for your child’s education.
It may sound cold, but your child can always do what millions before them have done, and that is borrow or work to pay for their education. Don’t forget the myriad scholarships, grants, and other school aid or work programs that may be available to them. Your child will have the rest of their adult life to pay back education. There is also the possibility your child may inherit your residual estate. As for you, you cannot borrow to pay for retirement. And, the last time I checked, no one was handing out retirement grants, scholarships, or work study payments for retirement.
Take care of yourself first. If you do have any extra, then it can go towards your child’s education. But make sure you know if you do have that extra. As an independent Certified Financial Planner™, I can help you plan for retirement and prioritize your goals.Contact me and let’s get started. #talktometuesday #education #Hireaplanner #retirement #stressfree #lifeplan #savings