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You Can Fund Your Children’s College Education and Retirement Simultaneously – Here’s How

Written By Editor on 7/7/23 | 7/7/23

Many parents face the challenge of saving for their children’s college education while also building a nest egg for retirement. Funding both priorities simultaneously can feel like a juggling act – and the stress can intensify as high school graduation and retirement dates draw nearer, particularly if you’re coming up short on your savings goals.

As your time horizon narrows, which should come first – funding your kid’s tuition or your own retirement? The answer depends on your situation, but here are some factors to keep in mind:

Prioritize college bills or retirement?

In most cases, saving for retirement should take priority over saving for your child’s higher education. To understand why, consider the following: 

  • You may not get to choose your retirement date.  Becoming injured or disabled, needing to care for an aging parent or being laid off from your job are just a few scenarios that could unexpectedly accelerate your retirement date, leaving you with less time to save than you were counting on.

  • You don’t want to run out of money in retirement. As a college student, your child may have access to scholarships, grants, loans or other financial aid to help pay the bills. The same isn’t true for your retirement. If your nest egg comes up short, you may need to work longer, reduce your living expenses (or perhaps both) to make ends meet.

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, too. This decision is particularly important if your child needs a graduate degree before entering their field of choice. If you intend to provide financial support, calculate how much the total cost will be so you have a clear savings target in mind. 

  3. Discuss your intentions with your child. No matter how much you plan to contribute (or not), talk to your child about your financial commitment so they know what to expect. Discuss what your contribution will look like at their preferred colleges. For example, if you agree to pay a set amount, perhaps this money will fully cover community college or a substantial amount at a state school, but it may leave a larger portion of the bill outstanding at a private college. Breaking down the costs for your child can help them make an informed decision about how much student debt (or scholarships, grants, etc.) are needed to cover the bill. 

No matter your financial situation, know that it is possible to make meaningful progress toward both goals, particularly if you are intentional about how to allocate your savings. Consult a financial advisor and tax professional if you want help setting specific savings goals and understanding the various investing options available to you.


Michael D. Lanuto, CRPC®, AWMA® is a Financial Advisor with S.M. Miller & Associates, a private wealth advisory practice of Ameriprise Financial Services, LLC. in Albany, NY.  He specializes in fee-based financial planning and asset management strategies and has been in practice for 7 years. To contact him: 518-949-2039; 4 Atrium Drive, Ste 200, Albany, NY, 12205;; 

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