Retirement or College Savings
We hear from so many clients that they have reduced their
retirement savings so that they can put something away for their children’s
college fund. It is understandable that
parents have a feeling of obligation to provide for their child’s
education. In a perfect world, you would
max out your retirement contributions and still be able to save for
college. Of course, if you are living
paycheck to paycheck – this is not possible.
We view retirement as the priority when you must choose
between the two, and this is why. There
is no financing for retirement. Unless
you have a pension to look forward to, it will be up to you to make up the gap
that Social Security does not fill. That
is why saving for your retirement is imperative. You may plan to work part-time during
retirement, but that plan may change as you age and desire the freedom to do
other things. The goal is to build up
enough of a nest egg, that you do not exhaust it before you’re done spending!
When it comes to college, however, there are options. Perhaps the biggest way to manage college
spending is to limit choices to those that are financially achievable. Once the field is narrowed, you can look to
financial aid packages, scholarships (from schools and other organizations),
work-study programs, grants and loans to make up the difference.
One thing is sure – when it comes to retirement or college
savings – start early to maximize the magic of compounding!
Honorine M. Campisi, CPA
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