Your Retirement, Your Children’s Education: Let’s Do the Math / Christopher J. Morris

08/15/2019

If you’re a young couple with children, you’re tasked with at least two major savings initiatives: your retirement and your kids’ educations. Both require early and smart planning. Here are a few things you can do to get started toward both objectives:

DETERMINE WHAT YOU’LL NEED

The first step toward achieving a financial goal is determining how much you’ll need. So do the math. Start with putting answers to the following questions:

For retirement:

  • How many years until you reach your desired retirement age?
    • Are you maximizing your participation in your employer’s retirement plan? Or if you are a business owner or self-employed, have you set up a tax-deferred plan that will maximize the returns on your contributions?
  • How do you expect to live during retirement? How much money will your lifestyle require you to spend annually?
  • Do you plan to work part-time, at least when you retire initially?

For your children’s educations:

  • How many years before they enter college — that is, how long do you have to save?
    • Will they attend a state school or a private college? What do you estimate that cost to be?
  • Do you plan to pay for all or a portion of your children’s costs — that is, will there be student loans or part-time work?

DETERMINE WHAT YOU CAN AFFORD

Once you’ve set down your needs and goals, you can do the math on what you’ll be able to put aside toward each goal. This is where you can turn to your financial advisor for knowledge and insight. We can help you project how much you need to save now in order to reach your goals on time. We can also help you ensure your savings are invested in the most tax efficient manner.

You might not be able to afford everything on your retirement and education wish lists. So planning includes prioritizing your goals including making sure you address retirement first. Of course, you want what’s best for your children, but you can find funding for college. You can’t take out a loan for retirement. Having retirement funds set aside is your highest priority. That includes avoiding the use of retirement accounts to fund education. This should only be considered in rare circumstances where there is no other choice.

Planning also allows you to make needed adjustments. You might plan to work part- time in your retirement. You could reduce what you spend now — or what you expect to spend throughout retirement — for a realistic retirement standard of living. You could narrow your consideration of colleges to less expensive schools.

If you have questions or concerns, we’re here to help you. Call me at 941-957-4242 or email me at cmorris@hbkswealth.com, and let’s do the math.

 

The information included in this document is for general, informational purposes only.  It does not contain any investment advice and does not address any individual facts and circumstances.  As such, it cannot be relied on as providing any investment advice.  If you would like investment advice regarding your specific facts and circumstances, please contact a qualified financial advisor. 

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Dad Helping daughters with homework, thinking about saving for retirement and college