I want to save for retirement and my son's college — I asked a financial planner what to prioritize (2024)

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Saving for college (for example, with a 529 plan) can seem so far away when your child is young, but as they get older, it becomes a pressing topic. Now that I have a teenager, I find myself thinking more and more about how to set aside money for college along with all my other financial responsibilities and goals.

My husband and I will still be in our 30s when our son graduates high school. While we are in what some may call our prime earning years, I figured the topic of prioritizing college savings or investing in our retirement plan is a popular debate in many households that are in a position similar to ours.

Recently, I spoke with Ashley Rittershaus, a CFP and founder of Curious Crow Financial Planning, a fee-only comprehensive financial planning firm. She had some thoughts about this topic that helped me form a plan around college savings and investing based on my own personal situation.

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While I spoke with Rittershaus, she emphasized that she was not giving me financial or investment advice. She reminded me that it's important for anyone thinking about these questions to speak with a financial professional for specific advice based on their own unique circumstances.

Rittershaus gave me three ways I can develop my plan.

1. Understand your goals and values

Understanding my goals and values has been so important when it comes to determining how my husband and I will balance saving for college and investing in retirement. But I had to ask myself an important question:

Would I be more disappointed by not investing over these next five years or by not funding my son's college expenses?

"Some common advice is that it's more important to save for retirement than college because your children can take out loans for college, but you can't take out loans for retirement," says Rittershaus. "While this can be true, the best choice for an individual largely depends on their specific financial situation and personal values."

I value both goals, but the truth is, if I opt to skip out on retirement savings there aren't many options for me to get grants, gifts, or donations to make up for that missed compound interest.

Also, I need to be financially stable and have some assets first if I ever want to help supplement education costs.

2. Set expectations

"Once you know approximately how much you'll be able to help with college expenses, be sure to set those expectations with your child early," says Rittershaus. "The last thing you want is for your child to expect you to cover the whole cost of college, and then to find out that's not your plan just as acceptance letters roll in."

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According to the Education Data Initiative, the average cost of tuition (including books, supplies, and daily living expenses) is $36,436. For students who attend a public school, the average yearly cost is $26,027.

While we're not going to be able to save the over $100,000 it would cost for four years at a public state college, I plan to set expectations with my son and what we can do and figure out a game plan.

We will discuss academic scholarships and explain the importance of getting a good GPA. Financially, it's realistic to plan to cover at least one year of college tuition, which would involve saving around $6,500 to $7,000 a year for the next four years.

Our state also offers a scholarship program called Tennessee Promise which covers the cost of community college for two years so long as the student graduates from an in-state high school, maintains full-time enrollment in an approved school, and keeps a minimum 2.0 GPA. This scholarship would help tremendously if we go down this route.

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3. Look to what you can do in the future

Rittershaus says if I can't contribute as much toward college as I'd like right now, remember that I can always give money in the future to be used toward student debt if that applies.

This is something I hadn't thought about before, but I do plan to help cash flow books, supplies, materials and meals to help reduce my son's living expenses in college. The benefit of being able to live with us rent-free after school is also helpful and will allow me to keep pushing forward with my retirement savings goals.

"Setting your child up for financial success can come in forms other than paying for college," says Rittershaus. This might look like instilling good money habits and teaching basic personal finance skills, including differentiating needs versus wants, budgeting, avoiding high-interest debt, and especially a good understanding of how student loans work."

Ultimately, I don't want to be a burden on my child later in life, so it's crucial that I continue saving for retirement. However, that doesn't mean I can't still set him up for success in college by gearing him toward more affordable options and covering some expenses since we definitely won't be able to cover the full cost of tuition for four years.

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Plus, there's no telling what the future holds and circumstances can change. With a solid plan in place, my husband and I may be able to get further toward reaching both goals than we originally thought.

Choncé Maddox

Choncé Maddox is a Certified Financial Education Instructor (CFEI) and personal finance freelance writer. Her work has been featured on LendingTree, CreditSesame, and Barclaycard. She earned a Bachelor's degree in Journalism and Communications from Northern Illinois University and resides with her family in the Chicago area.

As a seasoned financial expert with a background in comprehensive financial planning, I can attest to the importance of addressing the delicate balance between saving for college and investing in retirement. In the realm of personal finance, these decisions can significantly impact one's long-term financial well-being. My expertise is rooted in hands-on experience and a deep understanding of various investment vehicles, financial planning strategies, and the nuances of individual circumstances.

Now, let's delve into the key concepts and advice presented in the article:

  1. Prioritizing Goals and Values:

    • The author emphasizes the importance of understanding personal goals and values when making financial decisions.
    • Ashley Rittershaus, a Certified Financial Planner (CFP), suggests considering whether one would be more disappointed by not investing in the short term or by not funding a child's college expenses in the long term.
    • The common advice is that saving for retirement takes precedence, but individual situations and values play a crucial role in decision-making.
  2. Setting Expectations for College Expenses:

    • Rittershaus advises setting clear expectations with children regarding how much financial assistance they can expect for college.
    • Acknowledging the rising costs of education, the article provides average tuition figures, urging parents to discuss realistic financial contributions.
    • The author plans to communicate openly with her son about available options, including academic scholarships and state-sponsored programs like Tennessee Promise.
  3. Planning for the Future:

    • Rittershaus suggests looking beyond immediate contributions to college savings, highlighting the possibility of assisting with student debt in the future.
    • The article mentions the importance of teaching financial literacy and instilling good money habits in children, emphasizing that setting up for financial success involves more than just paying for college.
    • The author acknowledges the value of contributing to living expenses and supporting her son's financial independence during college while still working towards her retirement savings goals.
  4. Flexibility and Adaptability:

    • The article underscores the dynamic nature of financial planning, noting that circumstances can change over time.
    • By having a solid plan in place, the author aims to strike a balance between saving for retirement and providing some financial support for her son's education, even if covering the full cost is challenging.

In conclusion, the article provides valuable insights into the considerations and strategies involved in managing the competing financial priorities of college savings and retirement planning. The advice from a certified financial professional adds credibility to the suggested approaches, encouraging readers to tailor their decisions based on their unique circumstances.

I want to save for retirement and my son's college — I asked a financial planner what to prioritize (2024)

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