Kids college or build retirement: Have cake & eat it too!
Is Paying for Your Kid’s Education Still a Top Priority?
In a perfect world, we wouldn’t have to rank one financial priority over another.
But now, more than ever, Americans are faced with many tough financial trade-offs. Paying off debt or saving for retirement? Raiding the 401(k) to pay the bills or putting them on a credit card? Trying to slog it out with a tough mortgage or walking away from a home?
New survey data from Country Financial highlights some of the tension parents are face when it comes to juggling their stressed retirement accounts and the ballooning cost of higher education for their kids.
Forty-seven percent of the 1,241 surveyed said that their children’s college plans are a higher priority than retirement savings, whereas 41% said that retirement savings came first. A majority (61%) said that the recession was not going to impact their plans for their children’s college education. Considering all of the belt-tightening — both from families and financial-aid offices strained by anemic endowments — we’ve heard about in the last few months, this is particularly astonishing. In spite of one of the worst economies in generations, parents say they’re still willing to shell out a lot for college education.
This is the first time in three years, according to the surveyors, that parents have put financing a child’s college education over saving for retirement. Last year, 47% of those surveyed put retirement over education funding and 42% put education funding as No. 1.
Financial advisers, who are already begging their clients to keep their eyes on the retirement prize, must be frustrated by this news — especially as federal options for student borrowing have expanded in recent months.
The belief is that college is still worth the cost pervades, with 79% saying that it’s a good investment. (Some economists beg to differ.) Interestingly, 65% of the respondents say the cost of college causes more worry than the thought of their child leaving home (24%).
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