Do You Really Have To Choose Between Retirement And College
College for the kids or retirement for you? Or can you possibly save for both? These are a couple of the most frequently asked questions of financial planners.
If you are not financially able to save for both, then Which goal should have priority? It is very difficult to accomplish either of these goals... let alone both.
First off, don’t criticize yourself about your money management. The ever-increasing cost of living, starting your family early, your employer's pension plan (or lack thereof), and the skyrocketing college tuitions... these all add up to major money management hurdles.
These days, even seemingly healthy financial portfolios are not immune to a recession. Here is where the "oxygen mask" concept becomes paramount. You have all seen it on TV or probably in person... an airline stewardess (gosh I'm dating myself) stands in front of the passengers. As she demonstrates how to put on the oxygen mask she emphasizes that parents are to put their own masks on first, and then tend to their children. After all, if the parents pass out, what good are they to their kids?
Let's face it. If you do not have enough money for retirement, your children will bear the burden. Don't gamble yours and your children's future on you being able to recoup the costs of college tuition by the time you retire. Nor should you rely on Social Security to meet all your needs. It's not good financial management... it's extremely high risk.
The best thing to do for your family is to stay financially strong, and put your retirement first. It may sound selfish, but it truly is the best strategy for your family overall.
If you want to try to save for both, here’s some advice. Determine the maximum amount you can save each month, and divide it 75% for your retirement and 25% for college tuition. As your finances improve, increase the amount you save, but maintain the 75%-25% allotments.
According to many financial planners, the mistake many families make is not involving the children in financial planning. Have them follow the same 75%-25% split that you do. Set up a bank account for each of your kids, and insist that they deposit 25% of their earnings... whether it is money earned from chores, good grades, even birthdays and holiday gifts.
This is especially important when they reach high school age. Continuing this savings habit (still at 25%) with part-time job earnings not only helps save money for college, but it teaches your kids crucial money management practices. It also helps them comprehend the enormity of your financial efforts as parents.
So, passengers... make sure your own "oxygen masks" are firmly in place, and then tend to your children's needs. You must survive so they can.
Susan Nelson Hopkins
is the
webmaster for three website collections... the
Eyes-Only-Club (includes several family sites),
Susan's Gardens (a group of gardening sites), and
BirdsnBugsnBees
(a sample of planned kids sites).
Hopkins-Enterprises is another of her sites, and includes links to
family-friendly activities and topics. All websites include material either
authored by Susan or adapted by her... including the graphics. AND, the content
is always family-friendly.
|
|
More Articles
Site Map
Retirement Planning Software
Early Retirement Planning
Planning Retirement Strategy
Retirement Lifestyle Planning
Retirement Planning Calculator
Retirement Planning Tips
The Retirement Dictionary
Quick Reference Guides |
America's
#1 source for retirement information
Check out these great
retirement planning
guides
|
|
|
