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Should you save for your retirement or your kids' college? Here's the math

Putting your child's future ahead of your own is a well-intentioned miscalculation, experts say.
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If you're trying to save for your retirement and your child's college fund, remember this: College is typically four years, but your retirement may last 20 years or longer.Syda Productions / Shutterstock

It’s a financial decision many American families face as their children get older: Does building up the college fund or saving for retirement take priority?

T. Rowe Price asked a thousand parents what they would do, as part of its annual Parents, Kids & Money survey, and 74 percent said saving for college was the higher priority for them.

Stuart Ritter, a senior financial planner at T. Rowe Price, says that’s an understandable, but well-intentioned miscalculation.

“I'm not suggesting that you don't save at all for your kid’s college and only save for retirement or vice versa; this is not all or nothing,” Ritter said. “It's about prioritizing and that means putting the majority of your money towards retirement, while still saving for college.”

It makes sense that college is top-of-mind for parents as their kids get older, especially these days as the higher education costs are skyrocketing. But personal finance experts contacted by NBC News BETTER all agreed on the need for perspective: College is typically four years, your retirement may last 20 years or longer.

College is typically four years, your retirement may last 20 years or longer.

“I think it's a classic example of put your own oxygen mask on yourself before you help the person next to you, even if that person is your kid,” said Mandi Woodruff, executive editor at the financial advice website MagnifyMoney. “I would certainly say for parents who are cash-strapped to focus on your own retirement nest egg first and foremost.”


Personal savings are key to having the lifestyle you want in retirement. While there are various ways to pay for college — including scholarships, grants, loans and work-study — the options for building up that nest egg are limited.

“As parents, we tend to want to do everything we can to help our children succeed, but sometimes we focus on the present at the expense of the future,” said Andrea Coombes, investing expert at NerdWallet, a financial advice website.

I think it's a classic example of put your own oxygen mask on yourself before you help the person next to you, even if that person is your kid.

If you delay contributing to your retirement savings in order to fund college, you could run out of money in your golden years. What then? Many parents assume their grown-up kids will be there to help.

A recent survey by NerdWallet found that:

  • Almost a quarter of the parents saving for retirement (23 percent) expect their kids to provide them with some financial support after they retire.
  • About one in six millennial parents saving for retirement (16 percent) said they expect their children to provide financial support for more than 30 percent of their retirement costs.

Coombes points out that relying on your children to help finance your retirement can jeopardize their independence and financial welfare.

“At that point, your kids might be raising their own children and trying to put money in their kid’s college and save for their own retirement, so it kind of becomes a vicious cycle,” she said.


Parents are often reluctant to discuss family finances with their kids, but financial advisers say it’s important to have the college money talk.

“And parents need to learn to say no to their children,” said Mark Kantrowitz, an expert on college financing and publisher of “Tell them you’ve saved a particular amount of money for their college education and that you can contribute so much money from your income, say a couple thousand dollars a year from income.”

Prepare for that talk by determining the total family resources available to pay for college. This includes: savings, contributions from income, scholarships that have been won, a reasonable amount of student loan debt and possibly some parental borrowing.

What is a “reasonable” amount of student loan debt? It should be less than your son or daughter’s annual starting salary at graduation, Kantrowitz told NBC News BETTER. If total debt is less than annual income, the graduate can afford to repay those student loans in 10 years or less.

Now, it’s time to see which colleges the family can afford. You do that by checking the four-year net price calculator at various schools. Most will have these calculators on their websites and will help you narrow down the field to colleges that are within the ballpark of affordability. Typically, the least-expensive option will be an in-state public school.

“If your total resources exceed the four-year net price of the college education, the college is affordable, you can afford to go there, and you'll graduate with a reasonable amount of debt,” Kantrowitz said. “But if your total resources fall short, you will have to borrow an unreasonable amount of money, in order to attend that college. And you should think about enrolling in a different college.”


“Saving for retirement is a real challenge. You’re putting money aside for an event that’s decades into the future, and you may have only a vague idea of how much money you need to save,” said NerdWallet’s Coombes.

If you aren’t sure whether you’re saving enough, various calculators, such as this one from NerdWallet, can help you figuring out how you’re doing.


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