How to Balance College and Retirement Planning
Saving for retirement and college education is a real juggling act. Following the simple steps below can help you to avoid dropping the ball on these important financial goals.
- Determine your goals
Before dividing up your savings between retirement and college, you need to answer some key questions.
- How long until your child/children go to college?
- What type of education (four- or two-year college, private or public institution) are you saving for?
- Do you want to pay for all college costs or a certain portion?
- When are you planning to retire?
- What kind of lifestyle do you want in retirement?
- Are you on track to meeting your retirement goals?
- Assess your savings
Now that you've determined your goals, find out how much to save. Bright Start offers a calculator that projects future college costs and how much you need to save.
- Make it happen
Decide how much to divide between each goal. Many people put a priority on planning for retirement but getting an early start on college, even if it's a small amount each month, can add up. Just $100 a month for 18 years adds up to more than $38,000, based on a hypothetical 6% annual rate of return.1 Remember, saving more today should translate into less borrowing tomorrow.
1. The calculations are for illustrative purposes only and the results are not indicative of the performance of any investments. The calculations do not reflect any plan fees or charges that may apply. If such fees or charges were taken into account, returns would have been lower. With any long term investment, investment return may vary. These plans do not assure a profit or protect against losses in a declining market.