Every parent wants to see their child take full advantage of all possible educational opportunities. It’s natural for you to want the best for your child and to want them to maximize their potential. That’s why many parents put a greater emphasis on saving for their child’s college education than on saving for their own retirement.

Today’s college students face financial challenges that previous generations didn’t face. The cost of college has risen significantly in recent decades. Many students have to fund their education with student loans. The combination of student loan payments and a soft job market for new graduates can create a challenging situation for many young Americans.

You may be tempted to take out loans yourself so your child won’t have to face the pressure that can come with sizable student loan debt. If so, you’re not alone. According to estimates from the Government Accountability Office, more than 2 million people between the ages of 50 and 64 hold Direct Plus Loans. That’s a type of loan that parents can take to fund their child’s education. That number has doubled since 2005.1

While your decision to fund your child’s education may be based on the best of intentions, it could create problems for your own retirement. Money that’s spent on student loan payments is money that can’t be used to save for retirement.

Fortunately, if your child has not yet started school, there are steps you can take to minimize the impact of student loan debt. Below are a few tips to consider as you plan your child’s education and determine how your family will pay the tuition:


Keep retirement savings as a priority.

Perhaps most crucial, don’t lose sight of the importance of retirement savings. You may be tempted to reduce or even pause your retirement account contributions so you can pay for college tuition or make student loan payments. However, even a pause of only a few years could have a big impact on the final amount of your retirement savings.

Set a hard limit on the minimum amount you will contribute to your retirement savings every month. By preserving retirement savings as your top financial priority, you can limit the impact that college funding will have on your nest egg.


Look for ways to cut college costs.

If your child is not yet in college, you have the benefit of time on your side. You still have time to be creative with your planning and look for ways to cut the overall cost of college. If you can cut the cost enough, you and your child may be able to avoid student loans altogether.

For example, take time to apply for all possible scholarships, grants, work-study opportunities and more. Perhaps your child could consider attending a local community college for the first two years of school and then transferring to a larger school for the later years. There are many ways to fund an education other than taking on student loan debt if you think creatively.


Talk to your child.

Finally, it’s important to include your child in the financial conversation. They need to know what your financial limits are so they have an expectation of what they will need to contribute. Share with them your plans for retirement and how those plans could be impacted if you spend more than you can afford on college.

If your child has already graduated and you are paying for their student loans, you may want to have a discussion with them about how the payments are impacting your ability to save. You may be able to work out a plan in which you gradually shift the responsibility of the payments to them over time.

Ready to develop a college funding strategy that protects your retirement goals? Contact us at Spicer Wealth. We can help you analyze your needs and develop a plan. Let’s connect soon and start the conversation.


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