More Americans choosing retirement investments over paying their child's college tuition
July 20, 2011
The rising cost of a college education is putting many of us in an uncomfortable situation: Should we put our retirement savings accounts ahead of paying for our child's college?
A new study from Country Financial found that an increasing number of Americans are choosing the retirement savings accounts.
Choosing to fund retirement
The study found that 46 percent of us say it's more important to save for retirement than to pay for our child's college education. That percentage is up from 43 percent in 2010 and 42 percent the year before.
While that may sound cold-hearted to some parents, the truth is that many financial advisers agree with that approach. You won't be helping your kids out much if you run out of retirement savings and need to ask them to help support you down the road.
Another reason why an increasing percentage of parents are choosing retirement savings accounts over college tuition bills: 26 percent of them feel a college education is not a good investment anymore, up from 19 percent who felt this way in 2010. While money market rates aren't that great and even the best savings accounts have historically low returns, they look lucrative to the return some parents see their child getting from an expensive college education.
Country Financial reported that the average student loan debt now approaches $30,000, and with uncertain employment prospects, the return on that expenditure may be a long time coming. Some may feel it's smarter to put the money in an online savings account or into a money market account.
Bridging the gap in college funding
Parents faced with the difficult tuition vs. retirement savings question have some options, however.
You can ask your kid to shoulder the responsibility for now, and if later in life you have the financial wherewithal to help out, you can help pay down those student loans.
Your child can also find a cheaper school to go to. Sure there are advantages to going far away for college, but chances are an in-state school is just as good and a lot cheaper.
Finally, you can have your child take on a part-time job to help pay the tuition bill. This is life, and working to help for their degree will heighten their appreciation of what they've accomplished.