Financial Intel Monthly

Saving for Retirement and a Child's Education at the Same Time

May 17, 2019 1:05:02 PM / by The Retirement Group (800) 900-5867


You want to retire

Know what your financial needs are

The first step is to determine your
financial needs for each goal. Answering the following questions can help you
get started:

For retirement:

How many years until you retire?

Does your company offer an employer-sponsored retirement plan or a
what your balance will be when you retire?

How much do you expect to receive in Social Security benefits?
the benefit calculators available on the Social Security Administration's
website, You can also sign up for a my Social
estimates of retirement, survivor's, and disability benefits.)

place and live more simply?


For college:

How many years until your child starts college?

Will your child attend a public or private college? What's the
expected cost?


Does your child have any special academic, athletic, or artistic
skills that could lead to a scholarship?

Do you expect your child to qualify for financial aid?

Many on-line calculators are available
to help you predict your retirement income needs and your child's college
funding needs.


Figure out what you can afford to put aside each month

After you know what your financial


Retirement takes priority

Though college is certainly an
child is in college to start saving, you'll miss out on years of potential
but there's no such thing as a retirement loan!


If possible, save for your retirement and your child's college at
the same time

Ideally, you'll want to try to pursue
years. For example, if you saved $100 every month and earned 8% annually, you'd
have $18,415 in your child's college fund after 10 years. (This example is for
illustrative purposes only and does not represent a specific investment.
Investment returns will fluctuate and cannot be guaranteed.)

If you're unsure about how to allocate
your funds between retirement and college, a professional financial planner may
be able to help. This person can also help you select appropriate investments
time doesn't necessarily mean that the same investments will be suitable. It
may be appropriate to treat each goal independently.


Help! I can't meet both goals

If the numbers say that you can't
probably have to make some sacrifices. Here are some suggestions:

Defer retirement: The longer you work, the more money you'll earn
and the later you'll need to dip into your retirement savings.

Work part-time during retirement.

may want to consider cutting back in retirement.

Increase your earnings now: You might consider increasing your hours

Invest more aggressively: If you have several years until
aggressively (but remember that aggressive investments mean a greater risk of
loss). Note that no investment strategy can guarantee success.

Expect your child to contribute more money to college: Despite
part-time to earn money for college.

expectations. Don't feel guilty — a lesser-known liberal arts college or a
far lower cost.

Think of other creative ways to reduce education costs: Your child
advantage of a cooperative education where paid internships alternate with

Can retirement accounts be used to save for college?

Yes. Should they be? That depends on
your family's circumstances. Most financial planners discourage paying for
college with funds from a retirement account; they also discourage using
403(b), you'll generally pay a 10% penalty on any withdrawals made before you
reach age 59½ (age 55 or 50 in some cases), even if the money is used for
college expenses. You may also be subject to a six-month suspension from plan
participation if you make a hardship withdrawal in 2019. There may be income


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