Retirement Savings Account or College Savings

Fund Your Retirement Savings Account First

Your retirement savings account should have priority if you cannot afford to save for both retirement and college for your kids, and here's why.

If you save for your child's college instead of your own retirement security, will you have enough to live on when you are ready to retire? Or will you need to work longer than you would like?

Do you want to depend on the generosity of your children to make ends meet when you reach social security age?

Think of it this way: There are many alternative ways of paying for college besides having parents pay for it, but are there alternative ways to fund your nest egg? No.

Your child can get student loans, grants, and scholarships to fund their college education.

College loans usually have lower interest rates and attractive repayment terms compared to other types of loans. It can even be a source of pride for your children to know they paid their own way and were not a drain on Mom or Dad's finances.

Set A Good Example

Take care of yourself first, and your kids' college second, if at all. If you save for your own future security so that you have a comfortable retirement situation, your children will be able to live independently and not need to worry about your security.

You also want your kids to respect and learn from your example. If you always put their needs before your own, they are less likely to respect you and your needs. Set a good example for taking care of yourself so they learn to do that, too.

How Much Should You Save?

Do you know if you are saving enough for retirement? Perhaps you can save for both your nest egg and college. To know the answer, you need to know how much you need for retirement.

Spend a little time reviewing your savings plans and your retirement budget projections (build them if you don't have them yet.)

Find out what you may get from Social Security. Since the Social Security Administration no longer sends out benefit statements, go to their site and use their estimator to see what your benefit amount is projected to be.

Once you determine how much you need for your ideal retiree lifestyle, you may decide that you can afford to save something for your kids' college, too.

But, if you can only save for one, now you have a better idea of why you should choose your retirement savings account over college funds.

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