One of the many ‘rules’ most financial experts advise is saving for your own retirement before saving for your kids’ post-secondary education. The idea is like when you are on a plane – you should put on your own oxygen mask before helping your little ones with theirs. The curiously paradoxical thing about this financial advice is that no one I have ever met seems to follow it.
Even Dave Ramsey gives retirement savings priority over college savings. He sees college or post-secondary education as “extremely important”, but still a “luxury”. At the same time, he comments that your retirement savings are necessary for providing “basics” that you will need in your own life. He believes that “your child will have other ways to pay—scholarships, grants, or part-time jobs,” or they can select a less expensive school.
Still, most people seem to be willing to simply work a few years longer to be able to provide for both their retirement and their kids education, or accept a less than luxurious retirement themselves. The median age for a couple to have their first child is age 29 in the US. This means that they are in their late 40s when that child is ready to go to college or trade school. By the time the average couple retires, their kids are adults that are off on their own.
Our son is in college right now and we started saving for his tuition when he was just a toddler. We made payments into his 529 plan at the same time we made contributions into our own 401k plans. The 529 plan savings were a lot less than what went to our retirement savings, anyway. If we hadn’t been ready to fund both his college and our retirement, I’m certain we would have kept working.
In a survey I did a few years ago, many early retirees had kids still in school (40% not even old enough for high school yet). Still, not a person that responded said that they had prioritized their retirement over their kids education. Everyone had a plan to accomplish both. Clearly, early retirees are a unique group, but still no one put their own desires ahead of what they felt their kids would really need.
What was your approach to balancing college & retirement savings?
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MrFireStation 
We are doing both. With two kids in college now and a third about a year away we are trying to cash flow as much as possible and save for retirement. It may mean a few extra years of work for myself on the backend, but its something I willing to do for my kids.
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Sounds like s great approach. I would feel really guilty to be goofing off in FIRE while my son was taking loans &/or working their way through college.
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We have been trying to do both also. I am in my late 40s, and my children are 6-8 years away from starting college. Our hope is to reach financial independence before they begin college, and we are focused on contributing to both retirement and 529 accounts. Whether I will really be willing to leave my job and believe in the math that says we are ready to finance both early retirement and our children’s education is still to be determined!
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We did exactly that – retired when our son was just finishing high school. It’s a risk to leave work with that big bill coming, but three years later it has worked well. I even took some classes/seminar series at his university myself!
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We saved for both at the same time. We have 4 kids and the month they were born we started saving for college. It was the only way it worked for us. Our youngest are 25 years old and everyone that is going to college is done with college but we certainly didn’t prioritize retirement over funding college.
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Saving for 4 kids – wow! Sounds like you got ‘on it’ (college savings) early and it paid off. That’s a big commitment. Did you work/are working a few more years to make retirement happen the way you wanted?
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Yes and no. I hit my “official” retirement number when I hit age 55. I worked until age 58 – for a number of reasons including – being more conservative, a blow out retirement trip (yet to be taken) and waiting for a corporate kiss goodbye.
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We were saving in the 529 from the first month… I want that money in early so it has a chance to do some heavy lifting by growing. My husband and I did not have college debt and it has been a key element in our financial freedom. I hope to give that to our daughter assuming it is a reasonably priced school.
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We are like you. A college degree without debt is a great gift for our kids. Not possible for many and I mostly agree retirement should be the first priority – otherwise we could be a burden on our kids when we are old and no longer able to work. My wife and I have worked hard and have been mostly smart BUT we have also been very blessed.
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Smart & blessed is a great combination, for sure!
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My son goes to college in a year and a half. We saved for it but his ambition is way more than we planned for. It is now a work in progress for us trying to figure out how to bridge that gap.
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It sounds like his ‘ambition’ include a very pricey university. Most parents that I know ‘cap’ their contribution and let their kids figure out the difference. It’s a good lesson in economics for them! My opinion is that a smart kid with ambition will do well wherever they go. Worked for me!
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That’s the route we have been talking about. We planned for a college education, but not that college.
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I went to a very modest state school. Nothing fancy. Met my wife there. In the course of my career, I ended up letting a lot of people go who went to Harvard, Stanford, etc.
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We did both. We started college funds from day one for both kids, but we were also maxing our 401ks at the same time. We also required both kids to take one small student loan for their final college year, so they had a vested interest in their education and post college success at getting a good job (to be able to pay for it). I suppose, those college investments prolonged our early retirements slightly, but retiring at age 50 was just fine for both of us. And both (now grown) daughters are well on their way in life, and very successful in their own careers. Both are also well on their way to their own FIRE. I couldn’t be more proud of either one!
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Sounds like you achieved the best of both worlds!
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