Finding the balance between their future and yours
You want to give your kids every advantage.
You imagine them going to a great college, graduating with minimal debt (or none at all), and starting adult life on solid footing. That’s a good desire. It’s why so many parents start thinking seriously about college savings.
Maybe you’ve already begun…but you’re wondering if you could and should be doing more.
That’s a question that keeps many parents up at night:
How much should I sacrifice for their education when I also need to prepare for my own retirement?
It’s a real tension. You love your kids and want to help them succeed. At the same time, you don’t want to become a financial burden to them later in life.
Let’s talk about how to find the right balance.
The hard truth about college savings and retirement
This may sound blunt, but it’s important to say clearly:
Your retirement needs to come first.
Why? Because your kids have options when it comes to paying for college. They can:
- Apply for scholarships and grants
- Work part-time during school
- Choose a less expensive college
- Take out student loans
Student loans aren’t ideal, but they exist.
You, on the other hand, don’t have options like those for retirement. There are no retirement loans. You can’t borrow your way into financial security later in life.
If you sacrifice your retirement savings to fully fund your kids’ education, you may end up relying on those same kids for support down the road. That’s not a “gift” you want to give them.
How much should you save for college?
The good news is you don’t have to pay for everything.
Many financial planners suggest aiming to cover roughly one-third to one-half of expected college costs. Your children can help cover the rest through work, scholarships, and manageable loans.
For example, if college costs $30,000 per year, or $120,000 for four years, saving $40,000 to $60,000 per child is a meaningful contribution. It helps significantly without putting your own future at risk.
Consider the type of school
It’s also important to be realistic about what different schools cost.
A state university may run $25,000 to $30,000 per year. A private college can easily cost $60,000 to $80,000 annually.
Your kids can receive an excellent education at many types of institutions. The most expensive option isn’t always the best option, and it’s rarely the only path to success.
Use the right savings tools
There are several vehicles that can help you save for education efficiently, including:
- 529 college savings plans
- Coverdell education savings accounts
- UTMA or UGMA custodial accounts
Each comes with its own benefits, limitations, and tradeoffs. The right choice depends on your broader financial picture.
A balanced approach
At Meriwether, we help parents create education funding strategies that support their kids without compromising their own financial security.
We do this because wise stewardship starts with a strong foundation. You can’t pour from an empty cup.
The goal isn’t to choose between your retirement and your children’s education. It’s to create a sustainable plan that honors both.
If you’re trying to determine how much to save for college while staying on track for retirement, we’d be glad to help you chart a clear path forward.
This content is for educational purposes only and should not be considered personalized financial advice. Please consult with a qualified financial professional regarding your specific situation and needs.