A Parent's Dilemma: Save for College or Retirement?
Money Girl gives critical guidance and key facts for prioritizing saving for college and retirement.
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Should You Use Retirement Savings to Pay for College?
A word of caution: Don’t get antsy and break your retirement piggy bank to pay for college. Not only does that rob from your future, but early withdrawals are typically subject to income tax plus a 10% penalty, if you’re younger than age 59½.
Instead, create a financial plan that includes both college and retirement savings as soon as you start a family. No one said it will be easy. To accomplish both you might have to cut expenses, get a second source of income, send your child to a less expensive school, or work longer than you’d like.
The sooner you start saving, the less stress you’ll feel both psychologically and on your budget. And if you’re like Grysell and get a late start, don’t feel guilty. Remember that putting retirement first is actually in your entire family’s best interest.
A final tip to save for college is to earn cash back rewards every time you shop online, buy gas, or get groceries by joining Upromise for free.
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