Throughout the challenges of recent months, we’ve continued to safely serve investors’ needs. We are thoughtfully evaluating our office openings and in-person appointments. Learn More
School is back in session, and though it may look very different this year and your attention may be pulled in many directions, don't forget to have a plan in place to pay for your child's future education costs.
The average yearly cost for a four-year program at an in-state, public college is $22,000. For a private college, that amount jumps to $49,900.* And that's just today's dollars. Those amounts will increase over time.
So where do you begin to find the money for school without sacrificing your retirement? It's all about understanding your priorities and the trade-offs you're willing to make. Here are three strategies to consider.
If saving for retirement and education are both top priorities and you're not willing to adjust the amount or timeline of either, you could find other sources of cash in your monthly budget. Also, consider how frequently you take on a major expense, like taking a vacation every three years instead of every year.
If you're unable to adjust your monthly budget, another idea is to put any raises, tips or bonuses you earn toward your goal. While raises and bonuses may be limited this year, saving just a portion of them can have a dramatic effect on your education savings. Also, for birthdays or other occasions, consider asking friends and relatives to contribute to your child's future rather than spend money on toys or other gifts.
If you don't have room in your budget to save more or spend less, you could cover less of the expense and have your student cover the remaining amount with student loans or other forms of financial aid. Another solution could be to have a conversation with your child about selecting a more affordable school, living at home rather than on campus or working a part-time job to help cover the costs.
Though they may not be your first choices, retiring later or planning to spend less during retirement could provide some flexibility when saving for education. By redirecting funds from your retirement goal, you can help increase the likelihood you'll achieve your education goal.
When weighing these trade-offs, it's important to share your thoughts with your financial advisor. By looking at your entire financial situation, he or she can work with you to develop a personalized strategy to help you balance both of these important goals.
* Includes tuition, fees, room and board. Source: Trends in College Pricing 2019, https://research.collegeboard.org/pdf/trends-college-pricing-2019-full-report.pdf
It doesn't have to be intimidating to think about how much you should save for both college and retirement.Read more
What makes a good financial strategy? Ultimately, it all begins and ends with your goals.Read more