Student loans and millennial debt are constantly in the news. So, it can be daunting to think that your child could be in the same position one day. You’d probably do anything you could to stop them from racking up debt before they hit 25 – but you’ve got a retirement to save for. However, if done right, know that you can contribute to your retirement fund and help your kids pay for college. It’s a balancing act really, but with these 5 tips, you can save for college and retirement.
1. Get Your Priorities Straight
A recent poll showed that parents aged between 18-34 are prioritizing both their retirement and helping their child through college at a similar rate. 61% of those polled agreed that retirement is a long-term priority, but 54% said the same thing about their kid’s college fund.
This might be because their own college days are still fairly fresh, and they are likely to be still paying off their own student loans. But, retirement should top the list at a much higher rate. You can’t take out a retirement loan, get a scholarship, grant or work-study program during your golden years.
Yes, we understand that you want to stop your children joining the world of work riddled with debt. But, you need to put yourself first in this instance. In years to come, they’ll have plenty of opportunities to make money – but you won’t.
2. Set Specific Goals
To save “enough” for retirement, you’re excepted to save between 10% – 15% of your income every year. If you’d like to know how much this will total, you can use a retirement calculator to do the hard work for you. And, if you’re not on track to meet that goal, you’ll be able to see how long it will take by implementing some small changes.
However, it’s harder to estimate a college budget as it depends on where your child will attend and which subject they choose to study. A good rule to use it to multiply your child’s current age by $2,000 to find out how much you should have already saved. By using this rule, you should be able to save half of your child’s total college fund.