Kids’ college vs. retirement: where to save?
In a perfect world, you could save for your retirement AND your children’s higher education. But what if it comes down to a choice between the two…which one should be the priority? Loving parents may not love our answer.
Of course, launching your college-graduated children into the world debt-free is an admirable goal and the topic of an upcoming blog post. However, doing so at the expense of your own retirement goals is not advisable.
Parents are starting to move their focus more toward retirement savings and less toward their children’s education costs, according to a report‡ from Fidelity Investments. The survey reported among long-term savers, 55 percent are saving for retirement while 33 percent are saving for their children’s college tuition. That split was closer to equal last year, but many parents are realizing that their children have several options to help pay for college—loans, scholarships and grants—options that simply don’t exist when saving for retirement.
How to save for retirement
You may not realize that savings anxiety exists at several different income levels. The lack of retirement preparation in the $20,000 to $30,000 income range (with nearly nine out of 10 individuals reporting they were not prepared) was surprisingly close to those making $100,000 to $150,000 (with nearly eight out of 10 giving similar answers).*
So how do you take charge of your financial future? If you’re in your 20s or 30s, you have more time to ensure a comfortable retirement. Just make sure you start right away. If you’re older than 40, we have a blog post next month that will offer specific advice for saving in your 40s, 50s and 60s. Regardless of your income, the best way to start is by taking the simple advice: determine what you can put away starting right now and do it. The sacrifice now will be worth it later.
*Source: American Consumer Credit Counseling survey‡
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Mr. Bryan Joiner is a Financial Center Manager for UMB Bank, N.A in St. Charles, Missouri. He is responsible for managing a team that advises consumer and small business clients on financial decisions, such as how to lower debt and save more. He joined UMB in 2011 and has three years of experience in the financial services industry.
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