Many of us don't have the money to put away for both retirement and college expenses for our kids. You can choose to put a little in each account or you can choose one account to fund.
The truth is your money should be placed into a retirement account rather than a college savings account if you don't have enough to save for both. Saving for retirement rather than saving for your children's college educations doesn't make you a bad parent. Let's take a closer look at why saving for retirement is more important than saving for college.
Your Kids May Not Want to Go to College
You may have hopes and dreams of your children wanting to go to college. However, your children may have ideas of their own. They may want to start their own business fresh out of high school or become an author or a number of other things that don't require a college education. To have stopped saving for retirement only to find out that your kids don't want to go to college can be frustrating.
Your Children Have Options
Here's the thing. Your children have so many options for paying for their college tuition and expenses. You don't have any options for paying for your retirement other than saving for it yourself. Your kids can get financial aid, take out student loans, work their way through college, etc. No one is going to come through and magically fund your retirement.
You'll Miss Out on Growth
At a 6% growth rate, $20,000 will grow to $38,000 in 10 years and $64,000 in 20 years. Putting that $20,000 into retirement only makes sense. You're doing something for yourself. You're going to be raising your children and caring for them for at least 18 years. Doing something for your future isn't the least bit selfish.
Retirement Years Are Growing
Things are much different than they were for our grandparents or great grandparents. People are living much longer and this means you'll need more money for retirement. Don't you want to live out your retirement years comfortably? Don't you want to be able to afford the care you may need in your retirement years? Do you really want to work past the age of retirement? Then put your extra money into a retirement plan.
Many Companies Match Your 401k Contribution
Last, but not least, many companies will match a certain percentage of the money you put into your 401k plan. In other words, you're getting FREE money. Why would you pass on that?
You may feel that it's your job as a parent to pay for your children's education, but it's not. Your children will have many options. Do something for yourself and put your money towards retirement.