How to Choose Between College and Retirement

Why saving for your golden years is usually the better choice.


Today's guest post comes from Trisha Wagner, a freelance writer for, where you can compare the rates of deposit accounts from dozens of banks. She writes regularly on personal finance and savings accounts.

Many parents of school age children are facing a difficult dilemma when it comes to saving for the future. They find themselves in the unenviable position of trying to find the balance between saving for their own future and saving for the education of their children. The two most frequently asked questions for financial planners are, “Which goal is more important?” and “How can I save for both?” To better understand the situation, let's take a moment to look at the issues parents today are facing.

Parents face additional disadvantages today:

  • College is expensive. You may wonder how your parents were able to put money aside for your education, but you must remember that the cost of a college education has increased dramatically from the time you went to school. The increase in tuition and other costs has outpaced the earning of today's parents.
    • Parents are starting families later in life. Several decades ago it was quite common for people to marry and have kids at a much younger age making it easier to save for their children's education with several decades remaining to save for retirement.
      • Parents are retiring earlier. When you consider that many parents want to retire early to enjoy their golden years it is easy to see how the years available for saving money have been reduced.
      • Which goal is more important?

        When it comes right down to it saving for retirement should be your first priority. This may be a painful realization for parents struggling to do both but the fact remains investing in your own future must take precedent over funding your children's education. Consider the fact that if you choose to sacrifice your retirement savings you may find yourself living in poverty or having to turn to your adult children for financial help in your later years it becomes clear that contributing to your retirement funds are more important in the long run.

        Can you do both?

        It is possible to save for both your retirement and your child college education but it will require careful financial planning on your part. The first step would be to discuss with your children the long term saving goals. Take the time to sit down with you child and explain the importance of setting money aside for their college education. By getting your kids involved in the saving process and making it clear to them that they will be responsible for funding part of their education your kids can begin developing good financial habits that will benefit them throughout their adult life. Once you have determined a percentage that your children are responsible for saving you can begin focusing on working toward both goals.

        It would be wise to have any additional savings in your own name versus that of your college bound child. While many parents cannot imagine their children using college savings for a new car or a trip abroad it is a possibility if the monies are in their name when they reach the legal age to access it. Additionally colleges will consider assets in your child's name when considering financial aid offers.

        In an ideal world parents would not have to make the difficult decision of choosing between their own financial future or the education of their children, but the fact remains in the long run securing your own financial stability will be the best choice for everyone involved.

        • For more, read Wagner's previous guest post, "Save Money at the Doctor's Office."