<p>Reading some of the posts on CC, I notice many parents take out huge loans to finance college educations, some even mention selling their homes to do so. Yet few parents mention having a fully-funded retirement. </p>
<p>Once we're retired, there are far too many variables that can affect our income (like declining interest rates - current retirees are earning peanuts on their CD's and IRA's). And our ability to recover investment losses or drops in interest income is lessened as we age - our health declines, we're too old to be hired, or, as in the current economy in places like Florida and Arizona - every other local retiree is competing with us for work.</p>
<p>So, since we cannot work when we're 85 to recoup our losses, but our 20-something kids can work for the rest of their lives (and thus have a greater ability to finance their educations than we do), why is it that so many middle-aged (and rapidly aging!) parents are jeopardizing their retirements to pay for the education of their able-bodied children?</p>
<p>What are your priorities? Are you meeting your retirement savings goals? Or have you foresaken your future to subsidize your children's education instead?</p>
<p>Retirement, retirement, retirement. I certainly don’t want my kids quality of life to be sacrificed in their 40’s, when they’re dealing with teenagers, because their parents don’t have enough money/long term care insurance/health insurance to live on their own.</p>
<p>Can you tell there are a lot of people around me dealing with this now ?</p>
<p>I think as parent one need to plan for children education as they plan for home, retirement etc. You should not need to choose between one or the other. It is like saying that will you pay your home mortgage first or save for retirement.</p>
<p>Well, we all don’t have the luxury of being able to have enough money to save for everything at the same time. I figured out one time that for DH & I to contribute the maximum to our 401(k), IRAs, & the kids ESAs each year that it would be $12,000/year plus 10% of whatever DH was making at the time. That was before we paid our mortgage, health insurance, food, taxes in NJ, etc. When you’re making $50,000 that’s almost not possible, at least not in high cost areas of the country. </p>
<p>I am very aware that there is a good chance that Social Security might not make it all through my retirement so I need to take full responsibility for my nest egg.</p>
<p>The last two years we’ve heard from one political party that we will probably experience high inflation. If is to believed, every good opposing party adherent ought to borrowing massively to finance college education expenses.</p>
<p>When we doing the college finance thing 2002-2006, borrowing for these expenses was expected not because of expected inflation but because the borrowing interest rates were even better than mortgage rates, and were fixed for 1 year. </p>
<p>We think we’re on track for retirement now that we have only 3 big college checks left to write, another decade or more to work, and the house is paid for. We put retirement savings before college (though we didn’t set records for either) and are feeling cautiously secure (though there won’t be any round-the-world cruises once we’ve stopped working :(). We didn’t realize exactly how expensive college would be once when the kids were babies. We met early on with a financial planner who told us we’d need to put aside the equivalent of another mortgage payment each month if we wanted to save the full cost of three college educations. Well, that much additional money didn’t exist when we were young and poor, so we saved as much as we could, putting retirement first, and told ourselves we’d make the best of our situation when the time for college came. </p>
<p>Thanks to merit aid and/or the possibility of a high-quality public college (OOS, in our case), we’ve managed to pay as we go, without borrowing. Dh is allergic to borrowing. In the 10 years we’ve had a kid in college we’ve continued to fund our IRAs, though we’ve done only a little additional saving. </p>
<p>We’ve managed by squeezing every nickel till it begs for mercy. :D</p>
<p>Our financial advisor suggested we put the max into our retirement savings. He further said that IF we needed to reduce contributions while our kids were in college, at least we would have a larger nest egg there earning interest (regardless of the amount of that interest). Loans can be paid off with retirement earnings. We took his advice and put as much as we could into our retirement accounts. While the kids were in college, we didn’t increase that amount too much. Now that they are done with college, we are contributing additional money to these accounts.</p>
<p>I’m sure there are financial advisors out there who would tell you differently…but this is what ours suggested to us.</p>
<p>My parents funded our college first - pay as we went, because we were immigrants with no savings. They started saving for retirement after we all graduated. As typical immigrants, they were very frugal, so they were able to save quite a bit in 10 to 15 years. They have a very nice house now, travel few times a year. They try hard to live on their fixed income, and we pay for some extras for them.</p>
<p>We max out on our 401k and whatever other savings my company allows us to do, but would definitely like to have put more away for retirement. If it comes to a choice of funding my kids education or retirement, I think I would opt for education. We paid for private education for our kids from k-12, and there were few times when it was hard to come up with 50k, and we had to dip into our savings. We didn’t pull them out of their school, which was an option.</p>
<p>I know the answer is supposed to be retirement first - but put us in the column of families who are focused on paying for college now and will worry about retirement later. We can barely do one - let alone both simultaneously. Will I regret this decision 20 years from now? I’ll let you know then.</p>
<p>I am not a fan of thinking uf this issue as black and white … retirement or college … personally, for us the best solution was a mix of both.</p>
<p>We funded retirement first … but not fully funding retirement and then starting on college savings. Saving for retirement at a rate so we would be fully funded at 65 … and when we had that cash flow stream covered we also started saving for college at the same time with anything left over after the retirement savings. </p>
<p>If we had fully funded retirement first we would have had much-much less saved for college and just about when the kids finished college we would have been fully funded for retirement and then piled extra on the retirement account after limiting the kids college choices or paying interest on college loans.</p>
<p>To figure this out I created a massive spreadsheet … one year per line and about 50 columns … one for each major income stream or expense … so I had our jobs, on-going expenses, new cars, college expenses, taxes, retirement withdrawals and income, etc in columns … this helped me figure out how much we needed to save for retirement and how much we could save for college. It also made Mom3ToGo (more) comfortable when we hit the first year of college and started withdrawing money.</p>
<p>We pay for children’s education first. In mid 1990’s, I was between employment for a period. Many expenses were cut but we continued to pay for their piano lessons etc. We never had the income to put kids in private schools but we did our very best to find the best public schools whenever we moved. </p>
<p>Don’t have the link now, but I have seen many reports about how Americans are unprepared for their retirements. Some report, if I remember it right, said that a high percentage of workers have less than $25,000 in their retirement savings. I keep thinking, what happens when they can’t work any more? </p>
<p>If they could make it, we surely could too.</p>
<p>We each have defined benefit retirement accounts, and amounts are automatically deducted from paycheck. Nope, we didn’t save any extra, but we did pay for college out-of-pocket as we went. Now, having JUST paid the last of 7 years of college expenses, we are going to focus on paying off the house (project that this will take another 3 years), paying off a new, entry-level vehicle, funding a few house maintenance and remodeling projects, and pouring money into Roth IRA. :eek:Ummm, looks like a lot, when one writes it all down! Okay, so maybe the house paying off will take 4 years! Providing the city and state and federal government don’t go bankrupt, we should have pensions and S.S. eventually.</p>
<p>Saving for retirement was first priority. We didn’t save for college until we had paid the house off when Odessagirl was in the 6th grade. Then we opened a 529 plan with a sum of money and deposited a monthly amount almost as much as our previous mortgage. Since we were never used to having that mortgage money in our pockets, we didn’t really notice it.</p>
<p>If I had a pension, I would not be nearly as concerned about saving for retirement. But I don’t, so if I don’t save for retirement, all I have is social security, which isn’t going to work. </p>
<p>We’ve kept up the rate of retirement savings, but recognized that the tradeoff meant that there were real limits on how much we could fund for college – OOS public with a partial scholarship was doable, a private with an annual family contribution of $35K was not. We’re not able to set aside anything but our retirement savings – the general savings account isn’t much more than five months of income at this point.</p>
<p>I drive an eleven-year-old car that I’d like to keep driving for another four years, we haven’t remodeled the house, bought expensive vacations or fancy home furnishings. My D will graduate from college without debt, and we’ll help her get a car after graduation and help with expenses of setting up an apartment and wardrobe when she gets her first post-graduation job. We’re looking at that as similar to paying for a fifth year of college. </p>
<p>And at that point it is leap into bigtime savings mode again. </p>
<p>I see families around us with multiple expensive vehicles, condos up at ski resorts, trips to Europe or Asia or Africa during summers, and kids at expensive privates that do not give huge amounts of merit aid (if any). I don’t have a clue as to how they do it.</p>
<p>great question…we have saved equally and I know most would say retirement first and be right…but being able to fully pay for my kids education is important to me. I guess it’s my not wanting to rely on anyone else(financial aid) mentality.</p>
?</p>
Now, having JUST paid the last of 7 years of college expenses,