RETIREMENT VS. COLLEGE: WHAT SHOULD PARENTS SAVE UP FOR?
Given today’s expensive costs of living, parents are trying their best to meet the family’s needs while still saving up for future plans. Whether its for a trip, new home, or business, setting aside a bit of income will always come in handy at some time, and will definitely leave everyone feeling more secure.
Among the many dilemmas of folks when it comes to tucking in a bit of extra cash is whether to put it in the college fund or in add it in your retirement savings. While many would agree that achieving stability by the age of 60 and above is vital, a good college education will be one of the most beneficial things you can give to your children.
So what should you choose? Typically, people are going to advise you set your priorities and try to finance both, but unless you have an over the top salary, this is going to be difficult. A set of responses regarding this matter was recently gathered by Curtis Hearn, CFP, in order to help parents decide in which majority have chosen to prioritize their retirement. Using this as basis, here are a few factors that would be useful to keep in mind:
Save up as early as you can.
Whether you’re in your early 20s or late 30s, opening up a savings account and financing it with a fixed amount every payday will save you in the near future. The earlier you start, the better as there will be more funds to allocate. Resist the urge to make a splurge each time you get your pay and allot a bit for your savings.
A lot of options are available in funding a college education.
There are a number of ways to resolve financial conflicts in sending your son or daughter to college aside from student loan. Some of these include taking a few courses in a local community college in which students can transfer to a bigger university after two years. Aside from this, there are online institutions that offer the same accredited degrees, allowing students to minimize expenses.
Retirement is inevitable, college is optional.
Let’s face it. Although having your child in a university getting a degree is a very satisfying thought, it is not guaranteed. In this case, while having a secure educational fund is beneficial, it may be useless had your son or daughter decided to take on another path other than college. In addition, some educational funds does not allow you to pull out your money without penalty given such cases. Meanwhile, retirement is certain. Each one of us would retire, and it would be wiser to prepare for something certain like this.
Reminder: Education Tax Credit
In order to lessen the burden of college fees, the tax code introduced Education Credits, which is a lot like tax deductions but are more beneficial as it reduces your tax on a dollar-to-dollar system.
Reflecting on this, it might be safe to conclude that although college is not discouraged,
more people prefer to secure their retirement savings first. Still, the best move when you get stuck in kinds of scenes is to have it consulted by experts that can give you the advice appropriate for your current financial state.
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