Saving For Your Own Retirement or College for the Kids?
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credit: thelastminute
Middle-aged couples often find themselves in a tricky dilemma – although they might be financially stable at the moment, they’ve got a couple of kids about to hit college, and they still have to keep an eye on their own retirement in 15 or 20 years’ time. A recent CNN case study gave a great example of a family facing this dilemma, and came out with a few useful tips that we can apply more generally.
Basically, you might have plenty of equity in your house, some decent savings in IRAs, and a good, secure income, but that won’t necessarily help you pay for your children to attend college now and still keep you in a good position for your own retirement. Some solutions include:
- Setting up a home equity line of credit to give you access to some of the equity in your home as cash, which can be used to contribute to college costs – but calculate a limit of how much equity is safe to use and stick to it.
- Get your children to contribute towards college costs too – check their eligibility for scholarships and financial aid, and the possibilities of part-time or summer work.
- If you’ve got college savings accounts for your kids, such as tax-advantaged 529s or custodial accounts, keep an eye on how the funds are invested to make sure the growth is maximized.
- Above all, plan ahead, and don’t risk your retirement savings or home equity entirely just to keep your children debt free – a balance is the right way to go.
Tags: children | college | income | Investing | Retirement | savings
This entry was posted on Thursday, April 10th, 2008 at 4:30 am and is filed under Budgets & Money Management. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.
