It seems like the costs of college just keep going up. Yet a large portion of our younger generations appear to be stuck in neutral (or even reverse) when it comes to harnessing the power of those educations to find good jobs.
According to the Yahoo! Finance article, “Save for Retirement First, the Children’s Education Second”, “Saving for retirement and a college education at the same time is a challenge for many families, but financial planners advise that if funds are limited – and for most people, they are – it is crucial to fund retirement first before contributing to an education fund.”
The article continues by explaining, “The reasoning? You, or your child, can always take out loans for college, but you cannot borrow for retirement.”
My wife and I have different backgrounds when it comes to how we paid for our college educations. And while we both had certain levels of parental assistance, we don’t want our kids’ college educations to kill our retirement.
We won’t be like the boomers
Some of the boomers we know have gone into substantial debt to pay their kids’ way through college. However, this can leave those who are nearing their retirement, devoid of the adequate savings necessary to safely and securely retire.
Excessive schooling costs at a point in which retirement might only be 10 or 15 years away could take money that’s been working hard for us in retirement savings accounts to be put toward college costs.
Where they stop? Nobody knows
There’s no guarantee that our kids will even go to college. Sure, up until now it’s been an accepted norm in our family, but this doesn’t mean that things aren’t changing in our society, and changing fast.
When college degrees are commonplace, they no longer set people apart as they used to. And it seems that the ability to obtain degrees online is dulling the effects that achieving a college degree once had. In his recent article for LinkedIn entitled, “Class of 2013: Your Degree Doesn’t Mean Squat”, CEO of OpenMe, Ilya Pozen notes, “I’d much rather hire someone who has been freelancing as a web developer for three years than someone who has a master’s degree in computer science. They’re bound to be more passionate, driven, and profitable in the long run, as they know what it takes to impact the bottom line.”
So it’s not always about the college name, reputation, and degree, but the person obtaining that education. This is why we’re placing a stronger focus on our children getting quality education in their formative years – focusing not just on learning, but learning how to learn and real world experiences – rather than an uncertain secondary educational future.
A balanced approach: Helping without hurting
If our kids decide to attend college, we hope to help them without hurting either party. What I mean by that is we’d like to assist them through a balanced approach that helps them pay for college without either side being overly burdened financially.
By sharing the costs of an education with our children (say splitting the costs evenly or coming up with another structured financial plan), they are left having to pay enough to appreciate the financial responsibilities of their college education while not being overly strapped by things like student loans after college or having to work a full time job to pay for their schooling during matriculation. Meanwhile, we’ll be able to assist them without digging ourselves our own financial hole of our own that could lead to a delayed and potentially unsecured retirement.
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The author is not a licensed financial, parenting or educational professional. This article is for informational purposes only and does not constitute advice of any kind. Any action taken by the reader due to the information provided in this article is solely at the reader’s discretion.