Why to pay yourself instead of your child’s college

collegeMany middle-aged, middle-class couples today find themselves in a bind. On the one hand, they know they have to save for retirement, and worry they aren’t saving enough. On the other, college tuition bills are looming, and they want the best for their children. Financial advisors recommend making retirement saving the priority. Here are some tips for doing that.

Certainly, college costs much more than it did a generation ago, and with private-sector pensions now largely a thing of the past, many people are on their own when it comes to retirement. This makes financial planning for your next phase of life that much more complex. What’s more, emotions often play a huge role in these decisions. Parents naturally want to do what’s best for their kids and feel an obligation to give them a good start in life.

Financial advisors are generally urging parents to think about their retirement first, even if it means they can’t give their kids a full ride at college. Financial consultants like Sally Brandon, vice president of a retirement-focused investment advisory firm, point out that students can get part-time jobs, grants, and loans for college. But you can’t get grants or loans for your retirement, and if you work part-time in retirement it should be because you want to, not because you have no choice.

They also point out that by foregoing retirement savings, parents risk becoming a financial burden to their kids someday, just as their kids are trying to get their careers going and save for their own retirements.

Brandon suggests that one way to approach this is to make your children partners in the process. Tell them you’ll fund part of their tuition, then work with them to find ways to fill in the rest. She emphasizes that funding your retirement instead of paying all of their college bills doesn’t make you a bad parent or mean that you don’t love them.

Instead, it means you want to avoid becoming dependent on them later and relieve them from worrying about your financial situation. What’s more, by seeing you put an emphasis on your retirement, you teach them the importance of saving and planning early for their own golden years. And that could be the greatest gift of all.


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