According to the National Center for Education Statistics, it can cost as much as $100,000 to send a child to a four-year public university. Saving for your kids’ college years can consume your finances. In one survey, nearly one-third of parents admitted to using their retirement savings plans to save for their kids’ college education.
Your kids’ college or your retirement, which should you save for first?
Experts say retirement should come first. While there are loans for college, there are no retirement loans. And if you don’t set aside money for illnesses or your future care, your kids might be paying more in the long-run. The cost of leaving the work force to care for an elderly parent can top $300,000 dollars.
Generally, people in their twenties and early thirties should be contributing at least 10-percent of their annual gross income to a qualified retirement plan. Most experts recommend that you take full advantage of special retirement accounts such as 401K, IRA, and 403B tax-sheltered annuities before funding college savings accounts.
If you have extra cash, a 529 college savings plan allows you to save money and withdraw it tax-free as long as the proceeds go towards school costs.
Just remember to put yourself first to ensure future success for your whole family.
Another thing to remember is that students can always apply for financial assistance programs to help out with college costs. According to Sallie Mae, 31 percent of college costs were paid by grants and scholarships.