As many parents start ramping up their retirement planning efforts, their kids are also preparing for an important next step in life: higher education. It may seem overwhelming to manage both at once, but it’s important to face some very hard decisions. If you’re thinking about tapping into your retirement accounts, ask yourself a few questions:
- Is this a sacrifice I can afford to make?
- Are there other ways to get the money we need?
- How much is my kid willing to contribute?
It’s no secret – college is very expensive, whether your kid attends a university close to home or in another state. According to the College Board, the average cost of tuition at four-year private universities is up to $33,480. After room and board, you could possibly spend about $45,000 a year or more. Although in-state universities may be cheaper, the expense is still great.
Putting a Plan in Place
One of the first things to do after evaluating the costs of tuition is to consult with a financial planner. They will help you assess your goals, look at your current retirement plan, and provide objective, realistic advice on whether or not your finances can meet your expectations. Many families find it easy to consider tapping into retirement savings to fund their children's higher education, but that may not be the best alternative.
While evaluating your financial standing, you may realize your retirement savings can’t withstand such an expensive hit and you need to look at other options. Now is the time to draw your children into the conversation and make decisions as a family.
Avoiding the Guilt Trap
Parents always want the best for their children, and our modern society even shames parents that are not able to put their kids through school, or willing to sacrifice their own retirement. As the cost of college continues to rise, your kids should take a vested interest in their education and be willing to contribute. Think about this – what if you paid for a very expensive college and your child decided that’s not what they wanted to do anymore? You’ve wasted precious retirement dollars that you may not be able to replace.
Most financial advisors tell parents to prioritize retirement savings for good reason. You can borrow funds to pay for college, but nobody lends money for retirement.
Millennials have reshaped the notion of college and tend to make their own rules. Having a stake in their own future will be meaningful, helping to take some of the burden off of you. Being practical about the situation and empowering your child to make a commitment to their education teaches responsibility and guidance for the future.
Working with a financial planner can help set goals and offer solutions where everyone can have a vested interest in paying for college, and you won’t compromise your retirement. In today’s economy, being strategic and attempting to avoid touching your retirement is a good way to go.
Ascend Investment Partners is not a legal or tax advisor. You should consult with your attorney, accountant and/or estate planner before taking any action. Ascend Investment Partners did not assist in the preparation of this report, and its accuracy and completeness are not guaranteed. The opinions expressed in this report are those of the author(s) and are not necessarily those of Ascend Investment Partners or its affiliates. The material has been prepared or is distributed solely for information purposes and is not a solicitation or an offer to buy any security or instrument or to participate in any trading strategy Services offered through Kesler, Norman & Wride, LLC dba Ascend Investment Partners, a Registered Investment Advisor. This message and any attachments contain information which may be confidential and/or privileged and is intended for use only by the addressee(s) named on this transmission. If you are not the intended recipient, or the employee or agent responsible for delivering the message to the intended recipient, you are notified that any review, copying, distribution or use of this transmission is strictly prohibited. If you have received this transmission in error, please (i) notify the sender immediately by e-mail or by telephone and (ii) destroy all copies of this message. If you do not wish to receive marketing emails from this sender, please send an email to email@example.com Please note that trading instructions through email, fax or voicemail will not be taken.
To Get Started Click Here
Sign Up for Email to stay in touch