7 Reasons You Should Save for Retirement Before Saving For College

August 18, 2020

Some people are torn on whether they should reduce retirement savings to save for their children's college. Here are 7 reasons why retirement should be your first priority.

 Pay yourself first!

    1. Ensure you have properly funded an emergency fund (3-6 months of expenses)
    2. As a CERTIFIED FINANCIAL PLANNER™, I recommend you save 10-15% of your income to sufficiently prepare yourself for retirement
    3. It used to be 10% threshold, but as people are living longer, healthcare costs are rising, and social security benefits are being reduced
    4. This leaves more responsibility on us to save than ever before
    5. Remember, loans are available for college, not for retirement
    6. Potential Match
      1. Your employer match is free money – take advantage, if available
      2. Deferring a percentage instead of flat dollar amount will allow your deferral amount to increase or decrease with your income
    7. Qualified Tuition Program - 529 accounts
      1. State income tax deduction
        1. Expanded qualified expenses to include up to $10,000 paid toward student loans

Please contact our office today if you have questions on your retirement and/or college savings plan.