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Saving for College vs. Saving for Retirement

Saving for College vs. Saving for Retirement

February 27, 2024

The Dilemma of Saving for College vs. Saving for Retirement: Navigating Financial Priorities for Parents

As parents, we want the best for our children, and that often includes providing them with a quality education. However, in today's world, the rising costs of higher education have left many parents grappling with the difficult decision of whether to prioritize saving for their kids' college education or saving for their own retirement. While the desire to spare our children from the burden of student loans is understandable, the reality is that saving for retirement must take precedence. Here's why:

The Student Loan Dilemma

Many parents today know firsthand the challenges of student loan debt, having grappled with it themselves during their college years. The prospect of burdening their own children with similar debt is a source of concern for many parents, driving them to prioritize saving for college over saving for retirement. However, this approach can have serious consequences for parents' long-term financial security.

The Importance of Retirement Savings

Saving for retirement is not a luxury—it's a necessity. Unlike college expenses, which can be funded through a variety of means, retirement savings are essential for maintaining a comfortable standard of living in your later years. With longer life expectancies and uncertain economic conditions, it's more important than ever for individuals to prioritize building a robust retirement nest egg.

Options for Funding College

When it comes to paying for college, parents have a range of options at their disposal, including:

  1. Community College: Starting at a community college for the first two years can significantly reduce the cost of a four-year degree.  One of my friend’s daughters went to community college for two years then transferred to UCLA and graduated from there.  Her diploma is from UCLA, yet it cost a little more than half what they would have paid if she went there for 4 years.
  2. Less Expensive Undergraduate Options: Choosing a less expensive undergraduate institution or pursuing in-state tuition can help lower college expenses.  This is especially true if your child plans to go to graduate school.
  3. Scholarships and Grants: Encouraging your child to apply for scholarships and grants can help offset the cost of tuition.
  4. Student Loans: While student loans should be used judiciously, they can provide a means for financing higher education when other options fall short.

The Reality of Retirement Savings

Unlike college expenses, which can be managed through various strategies and alternatives, saving for retirement is a singular endeavor. There are no second chances or alternative paths when it comes to retirement savings. With the compounding effect of time and the unpredictability of market returns, starting early and consistently contributing to retirement accounts is paramount for achieving long-term financial security.

Finding a Balance

While it's understandable to want to prioritize saving for your children's education, it's essential to strike a balance between their educational needs and your own financial well-being. Here are some strategies for navigating this balancing act:

  1. Set Realistic Expectations: Have open and honest conversations with your children about the financial realities of higher education and the importance of responsible borrowing and budgeting.
  2. Maximize Retirement Contributions: Take advantage of employer-sponsored retirement plans, such as 401(k)s or 403(b)s and contribute enough to receive any employer matching contributions.
  3. Automate Savings: Set up automatic contributions to your retirement accounts to ensure consistent saving and take advantage of dollar-cost averaging.
  4. Explore Financial Aid Options: Encourage your children to apply for financial aid, including scholarships, grants, and work-study programs, to help offset college expenses.
  5. Seek Professional Guidance: Consider consulting with a financial advisor who can help you develop a comprehensive financial plan that balances your children's educational goals with your own retirement objectives.


Saving for your children's education while also prioritizing your own retirement can feel like a juggling act, but with careful planning and a clear understanding of your financial priorities, it's possible to find a balance that works for your family. While it's natural to want to provide your children with the best opportunities possible, it's essential to remember that securing your own financial future is the best gift you can give them in the long run. By taking proactive steps to save for retirement while exploring cost-saving strategies for college, you can set yourself and your children up for success both now and in the years to come.


If this topic is something you have struggled with, let’s set up a call and make a plan that works for you and the kids. You can reach me HERE.  As always, thanks for reading!  KB