The soaring cost of a college education has been making headlines for the past decade. So has the increasing number of older people delaying retirement past the age of 65 because their Social Security benefits do not stretch to meet their income.
Now there’s a new wrinkle. An increasing number of parents are putting off retirement to pay kids’ college tab because those soaring costs mean they are still funding their kids’ passage through college.
According to a recent report by T. Rowe Price, 57% of parents said they have saved some funds for education, but just 54% have set aside money for their own retirement. Just over half of those polled said they had an emergency fund, which should be part of any financial plan.
Anxiety is growing along with the contribution. Forty-two percent of parents indicated they are “losing sleep” over their kids’ college costs. That’s a 50% jump over the 28% who indicated that level of college fund-related stress two years ago.
How To Save
While both a college education and retirement are important, financial advisors point out that college funds have more flexibility than retirement. There are ways to significant lessen the costs of college, such as attending a state school (which are generally cheaper) or leveraging a high GPA into substantial financial aid for a private or state college. Students can also win fellowships or work part time.
People approaching retirement, on the other hand, generally cannot cut their costs significantly.
Financial advisors recommend a prudent plan that saves for both retirement and college funds. Starting early for retirement and at your child’s birth for college are highly recommended goals.
Please contact us for more information on preparing for your financial future.