College bills hit as parents about to retire

Is college getting in the way of your retirement? Look for new resources at work, leave the Roth IRA alone and scale back the caviar dreams for both goals, financial experts say.

With more people becoming parents at later ages, college bills are hitting home just before traditional retirement age for many families, so navigating both goals becomes trickier. Meanwhile, the debt is piling up: More than one in four retirement-savers over 55 was carrying student-loan debt in a recent Fidelity Investments survey of its plan participants.

Some are putting children through school, others are still paying off decadesold loans from their own college days and others are taking on debt to retrain for second careers, said Akhil Nigam, head of Fidelity Labs incubator projects, which are testing online college debt tools. The new tools aim to help consumers consolidate old loans and avoid taking on new loans that are too large.

Financial advisers and college-planning specialists have been telling parents to prioritize retirement over college savings, often noting that you can’t borrow for retirement the way you can borrow for college.

Couples hitting the college years right before retirement should be wary of the common advice to use Roth IRAs for education, because Roth contributions can be withdrawn penaltyfree before retirement age. Clients who do it tend to falsely think they have more money than they actually do because it’s serving two goals, he said.