Should parents sacrifice retirement savings for college? As the parent of a high school senior, I understand the desire to pay for children to go to college. To help your child graduate debt-free with a degree is an admirable goal and a wonderful gift.
But beware. There’s an important thing to keep in mind: students can borrow for school but retirees don’t have that opportunity. Wall Street Journal reporter Veronica Dagher calls it “sabotage” to a family’s financial plan in her recent article, “Five Mistakes You May Be Making.”
Parents should consider the full impact of raiding their retirement accounts or taking out loans on their life after they retire. For many parents, it’s too early. They are not thinking about the realities of their retirement, and making mistakes today can hurt you later on. Financial missteps such as overspending or helping the kids pay for college instead of adding to retirement accounts could also increase the probability of running out of money sooner rather than later. It’s natural for parents to feel guilty about not being able to help their children more; however, sometimes the best gift to their children can be for the parents to secure their own retirement so they won’t need to lean on their children later on. It’s not a sound long-term strategy to sacrifice retirement savings for college.
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