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Oxygen Mask

"Put your own oxygen mask on yourself before you help the person next to you, even if that person is your kid." -instructions from airline personel

The average amount parents withdrew from their retirement accounts to pay for college rose from \(2,710 in 2013 to **\)5,276** in 2015, according to a Sallie Mae and Ipsos study. This increase is an alarming development—one based on fear and guilt.

The amount of money you’ve managed to save for your kids’ college is no measure of your desire to see them graduate from the school of their dreams. But no matter how much you want to help your kids financially during their college years, you need to be realistic about how you’ll do that and save for your own future needs.

T. Rowe Price asked a thousand parents what they would do, as part of its annual Parents, Kids & Money survey, and 74 percent said saving for college was the higher priority for them.


Why Retirement Comes First

You’ll depend on your retirement savings to live, eat, and pay for shelter—the basics. If you’re not working, that money is your only source of income.

Saving for college is extremely important, but it’s a luxury. Your child will have other ways to pay—scholarships, grants, or part-time jobs. They can select a more affordable school. Pay for your child’s college if you can, but remember that it’s not as important as retirement.

Retirement is a necessity. If you don’t have retirement money saved up, then you’re working until you die or you’re living on Alpo. Don’t guilt-trip yourself into doing something you’ll regret in a few years, like taking money out of your retirement. Your child will be okay—with or without your help. This isn’t child abuse. It’s wise parenting. Remember: College is a luxury. Food and shelter during retirement are necessities.

I'm not suggesting that you don't save at all for your kid’s college and only save for retirement or vice versa; this is not all or nothing. It's about prioritizing and that means putting the majority of your money towards retirement, while still saving for college.

It makes sense that college is top-of-mind for parents as their kids get older, especially these days as the higher education costs are skyrocketing. But personal finance experts all agree on the need for perspective: College is typically four years, your retirement may last 20 years or longer.


If you Don't Save For Yourself, Your Kids will Pay Later

  • Almost a quarter of the parents saving for retirement (23 percent) expect their kids to provide them with some financial support after they retire.
  • About one in six millennial parents saving for retirement (16 percent) said they expect their children to provide financial support for more than 30 percent of their retirement costs.
  • Relying on your children to help finance your retirement can jeopardize their independence and financial welfare. At that point, your kids might be raising their own children and trying to put money in their kid’s college and save for their own retirement, so it kind of becomes a vicious cycle.