How to save for education without taking your eye off of retirement

It’s no secret that many American parents want to support their kids by paying for their college education. According to recent Ameriprise research, 87% of parents today already have paid for or plan to assist with these costs. Furthermore, 33% of respondents have delayed their own retirement, or plan to, in order to help their kids pay for college.

While the choice to delay retirement to pay tuition is understandable and even admirable, the reality is doing so may not be the wisest financial decision. If you are considering how to balance saving for college and retirement, read on for some perspective.

Prioritize college bills or retirement?

Although it may be hard to hear, saving for retirement should take priority over college tuition. To understand why, consider the following:

• You may not get to choose your retirement date. Injury, caring for an aging parent, or a layoff is among the factors that could ultimately make the decision for you.

• You don’t want to run out of money in retirement. If your savings come up short, you don’t have the ability to apply for scholarships, grants or financial aid to help bridge the gap. (Your child has access to these options to help pay for college.) Instead, your options are likely to be working longer, finding other sources of income or spending less on travel and other retirement dreams.

While it’s imperative to focus on your own financial security in retirement, funding higher education is still an important goal for many parents. The key is striking the right balance between saving for both goals. Consider the following tips as a starting point:

1. Paying for college doesn’t have to be all-or-nothing. Many parents choose to pay a percentage of the total bill, cover certain expenses (e.g. tuition, technology fees or room and board), pay for a set number of years, or contribute as much as they are able to save by the first day of school instead of funding the full cost. Revising your college savings goal in one of these ways could allow you to direct more money to retirement.

2. If your child has sights on graduate school, decide whether you will contribute to those bills

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Bronwyn Martin