Comments on: Saving for College or Saving for Retirement: What’s Best for Us?

By: al

al — Thu, 12 Mar 2009 21:05:22 +0000

if you are going to pay for your kids’ college education, please at least engage them in conversations about how you planned for and managed that…make them appreciate it. the kids who didn’t “get it” made the absolute worst roommates…i couldn’t believe the sense of entitlement from some of my college peers! yeesh

By: Leah

Leah — Thu, 12 Mar 2009 16:58:18 +0000

I really like this post — it encourages folks to think about what is best for them. My parents taught me the value of money early; we sat down and talked about credit cards, savings, etc. When I got my first job, my mom took me to the bank, helped me start an account, and had me put all the paychecks in there. By the time I got to college, I was already fiscally responsible.

I earned some scholarships, and my mom paid the remainder of my tuition (~45% of private school room and board, or about $14k a year) by working overtime and being thrifty. I still thank her on a regular basis for releasing me from the burden of student loans; I’ve been able to pursue opportunities and low paying jobs that have enriched my life but not my bank book. And thanks to the lessons in being thrifty, I still put away money every single month no matter how little I am making. When I wanted to switch jobs to something lower-paying but much more satisfying, I knew I had to pay off my car loan, so I tightened my belt and took an extra job for a month to pay off the loan two years early and allow me to switch fields.

For my family, having undergrad tuition paid for was part of a larger overall plan of fiscal responsibility. All that is expected in return is that I do the same for my kids.

By: marie

marie — Mon, 09 Mar 2009 20:03:02 +0000

Please keep in mind that it is not just your own retirement that you are funding: it is also your children’s peace of mind. I am 35, and my parents are retired and self-sufficient. They are not rich, but they have saved enough money to take care of themselves. Barring a complete meltdown of society, I will not have to support them. They have given me some lovely pieces of jewelry over the years, and they have taken me and my DH on some fantastic trips, but the absolute, positive best gift they have ever given me is the knowledge that they have planned for their old age.

By: PirateKitty

PirateKitty — Mon, 09 Mar 2009 15:18:46 +0000

It’s an interesting debate.
I don’t have kids, but to me it would seem foolish to neglect your retirement for your childrens’ education.
The best gift you can give your kids is to let them live without the stress that they may have to take care of you financially one day.
My parent’s are not yet at retirement age, but I seriously worry about how they will afford retirement. They’ve worked hard all their lives, but didn’t really focus enough on future planning. Mind you, they didn’t pay for my education either (they didn’t have the money), but if they had been able to I’d have told them to keep their money and save me the worry later.
Personally, I think there’s a certain amount of pride and work ethic gained in covering your own education through loans and scholarships, that can’t be bought by a parent paying tuition.

By: Anitra Smith

Anitra Smith — Sun, 08 Mar 2009 20:35:46 +0000

We have a 6-month-old, and we have agreed that we can’t really afford to put aside money for her college education until we are done paying for our own (especially now that we are a one-income family). We both went to a private university, and graduated with a lot of debt.

I also have elderly parents; although they can provide for themselves, seeing how much everything costs them has impressed upon me the importance of saving for retirement.

That’s not to say we don’t have ANY savings for our daughter – we opened her a savings account as soon as she had a Social Security number, and any gift for her we’ve deposited directly into there. Once she’s old enough to understand, we’ll let her have a portion of monetary gifts to buy toys with, but most of it will still go towards savings.

By: Cake

Cake — Sat, 07 Mar 2009 23:22:46 +0000

“Its the quality of the parenting. That’s the bottom line.”

I think that is the bottom line in the discussion on spoiled vs hard working children and the discussion on stay at home vs day care.

It seems like many people will not save for their child’s education because their child will then be spoiled and ungrateful. By the time your child goes to college they will already be or not be spoiled and ungrateful children. That is a lesson they should be taught long before they are 18.

I think every parent wants to raise their children to be adults with integrity. There is no one way to do this. It can be done with much or little money and much or little time; it is all about quality not quantity. There are successful adults out there with varied backgrounds: College, no college, day care, stay at home, rich, poor, middle class. There are unsuccessful adults coming from the same places. What values are important to your family and how are you going to pass those values on to your children? These are the lessons that will inform your child’s adult behavior.

By: rob

rob — Sat, 07 Mar 2009 19:41:21 +0000

Courtney….you have said it all in one sentence. Its the quality of parenting. Thats the bottom line.

By: KoryO

KoryO — Sat, 07 Mar 2009 16:39:05 +0000

It wouldn’t be a proper “saving for college” post on the Simple Dollar without a few gratuitous swipes at people lucky enough to get their tuition and expenses paid for by mom and/or dad, would it?

Yep, I got that. Hate on me all you want. I hope to do the same for my boy, and if we are lucky enough to have another, for him/her too. I don’t think I was alone in appreciating what my parents did for me at the time, and I appreciate it more and more each year. I was able to save up for retirement at about the same time my peers were paying for college, and even with the market meltdown I’m still way ahead.

I will save what I can, and encourage them to go to the local public university (since very very few private universities are worth the premium price) after completing the pre-req’s at the local community college. Hopefully that will cover it, or most of it.

Then…..I’m starting to save for the grandkids. ;)

By: lindsay

lindsay — Sat, 07 Mar 2009 15:48:40 +0000

I think a lot, maybe most, of this discussion should center on the age of the parents at the time they have children, and, of course, how healthy their financial situation is when they begin bearing.

It seems obviously to me that if you’re an older parent (as many, many today are), you need to save for your own retirement. Not that anyone is entitled to a “retirement,” but we do live longer today because of medical advances, and we are not likely to be physically or mentally able to work in our later years.

Kids, OTOH, can attend state colleges or universities and can begin saving for those insignificant (IMO) fees by working in high school and putting away their earnings. It’s very inexpensive to attend a public university.

I agree that having to get student loans is a tough option. We didn’t finish paying my husband’s off until our older son was 12. Our kids were allowed to live at home while going to public university (both did) and both graduated without any student loans. It can be done. But we had our children younger (in our 20s) and still couldn’t afford to put money away for their education OR our retirements back then because of our debt, though there was no such thing as IRAs, SEPs or 401(k)s then. :-(

By: Rachel

Rachel — Sat, 07 Mar 2009 13:27:26 +0000

We never saved for our children’s education. We were young parents, and money was always tight, and it just did not seem that important. I am glad we did not. Our 27 yr. old son had a scholarship that paid 75%. We paid for his books and he went and got an AA. Our daughter did not have a scholarship and she went to the same community college, but only for three semesters. Even though we paid her tuition and books, it was not outrageously expensive. Our 15 yr old shows not interest in college. We are just trying to get him through high school. Now we are concentrating on retirement, and it is discouraging to see the losses our 401K’s have suffered. Still I would not do anything different.

By: Mr. ToughMoneyLove

Mr. ToughMoneyLove — Sat, 07 Mar 2009 04:41:49 +0000

Trent: I am astounded that you would use the term “canard” in characterizing the concept of saving for retirement as a priority that ranks above saving for college. Most Americans do not have enough income to successfully do both. On top of that, there are way too many people going to college for the wrong reasons and at too great an expense. The “canards” are that college is for everyone and that parents must sacrifice to provide it. On the other hand, retirement is inevitable, whether you are prepared for it or not.

By: Courtney

Courtney — Sat, 07 Mar 2009 03:26:02 +0000

I have to agree with Maureen and Jennifer. I bet that if it was Trent’s wife staying home to be a professional writer, those kids would be staying home with her.

And you know what? I have a toddler at home with me and I still manage to work from home, pulling in some serious dough. It can be done, without a SuperNanny.

I work before she gets up, when she naps, and after she goes to bed. So do most of my female peers.

There have been many studies done, but the dirty secret in academia is that daycare is only beneficial to children of the lower socioeconomic class. Children of the upper socioeconomic class in daycare actually do worse than their stay-at-home peers. It’s the quality of the parenting that counts, and nobody wants to admit that publicly. See also:

Positive Discipline: The First Three Years
Elsewhere, U.S.A.
Emotional Life of the Toddler
A Toddler’s Life: Becoming a Person
Montessori from the Start: The Child at Home, from Birth to Age Three

By: rob

rob — Sat, 07 Mar 2009 02:43:49 +0000

I have read all the posts. I m objective to all that wrote. But I still say that my child comes first. He is the most important. His future is the most important. He is the focus. I am done being selfish. Remember not all parents, just like like cops, judges, and lawyers, graduated at the top of their class.

By: Nate @ Money Young

Nate @ Money Young — Sat, 07 Mar 2009 01:28:11 +0000

You’re no good to anyone if you can’t take care of yourself.

You sacrifice your retirement for your kids education, but then your kids – swimming in debt – have to take care of your retirement because you put others ahead of yourself.

I’m with Trent, but perhaps there is a balance between saving for retirement and college. I still think saving for retirement would be the financially smart move – but saving for college would be the choice I make.

-Nate

By: Amy

Amy — Sat, 07 Mar 2009 01:09:18 +0000

I just want to say thank you, on behalf of your kids. My parents saved to make sure they could pay for the bulk of our educations, and I can tell you, we had it a lot easier starting our adult lives because of it. I did get some small scholarships, and I did work a part-time job in college (10 hours/week) for spending money, but I did not graduate college with mountains of debt that I would be paying off until my forties. Let’s face it, most kids will need to go to college to make a reasonable living. Parents who realize that fact up front are that much ahead of the game.

By: Michele

Michele — Sat, 07 Mar 2009 00:21:21 +0000

I haven’t read through all of the comments, but how many of you not wanting to pay for a child’s college are taking into account the fact that your children will be forced to put your information on their FAFSA applications. Its almost impossible for people under 25 to be considered “independent” these days, and if you’re doing well financially, your child will pay for it out of pocket.

I’ve heard horror stories about people struggling to pay their way through college because the government assumes by default that parents will contribute.

By: partgypsy

partgypsy — Sat, 07 Mar 2009 00:10:48 +0000

Not to hijack this thread if you had a choice would you put $200 a month towards college funds, or $200 extra per month for mortgage. If we do the first we will have ? depending on how the stock market performs to apply to college. If we do the latter our house will be paid off just in time the first goes to college, and would apply current salary towards helping with college. As we are planning to help with college either way, which do you think is a better “investment”?

By: Elisabeth

Elisabeth — Fri, 06 Mar 2009 23:56:30 +0000

@Mule Skinner who says “Retirement? Well, if I fall into the poorhouse, I will have three supereducated kids paying taxes to support it.”

Do you really think your three supereducated kids are going to let you survive on government assistance?

If the parent doesn’t save enough for retirement, the kid(s) will wind up supporting the parent. Then EVERYONE is struggling to pay for retirement.

By: Alexandra

Alexandra — Fri, 06 Mar 2009 23:17:48 +0000

I also agree that Trent should not watch his children while trying to write. Let him do his job, which is hard enough, then pay attention to his kids when he’s with them. It won’t kill them to play with other little kids their age for a few hours a day–it’s probably great for them!

By: Alexandra

Alexandra — Fri, 06 Mar 2009 23:12:12 +0000

I’ve just finished the paperwork for my little angel. Yes, 529s are in the parents’ names, if you set it up that way. As little money as possible should be in the child’s names but 529s are fine. UGMAs and UTMAs are in kids’ names. I think it’s fine to have kids participate in their own education, but remember it is MUCH more expensive proportionally than it used to be. When I went to a state university years ago, a kid could work full time at minimum wage and pay tuition and for living. Now, it costs $20,000 to go to a state university–twice as much as one year at minimum wage. A private college used to cost roughly the same as an average car (say about $25,000 today). Private colleges are now $50,000 a year. Also, kids get scholarships or not based on what parents make. So if you are middle class and you don’t help your kid at all, you are really screwing them up.