Follow Creighton Linkedin Facebook
Email Creighton Email
Financial
Nov 2, 2020

How To Save For Education Without Taking Your Eye Off Of Retirement

Sponsored Content provided by Creighton Hayworth - Associate Financial Advisor, Ameriprise Financial

It’s no secret that many American parents want to support their kids by paying for their college education. According to recent Ameriprise research, 87 percent of parents today already have paid for or plan to assist with these costs. Furthermore, 33 percent of respondents have delayed their own retirement, or plan to, in order to help their kids pay for college. (1)
 
While the choice to delay retirement to pay tuition is understandable and even admirable, the reality of doing so may not be the wisest financial decision. If you are considering how to balance saving for college and retirement, read on for some perspective.
 
Prioritize college bills or retirement?
 
Although it may be hard to hear, saving for retirement should take priority over college tuition. To understand why, consider the following:
 

  • You may not get to choose your retirement date. Injury, caring for an aging parent, or a layoff are among the factors that could ultimately make the decision for you.
 
  • You don’t want to run out of money in retirement. If your savings come up short, you don’t have the ability to apply for scholarships, grants or financial aid to help bridge the gap. (Your child has access to these options to help pay for college.) Instead, your options are likely to be working longer, finding other sources of income or spending less on travel and other retirement dreams.
 
While it’s imperative to focus on your own financial security in retirement, funding higher education is still an important goal for many parents. The key is striking the right balance between saving for both goals. Consider the following tips as a starting point:
 
1. Paying for college doesn’t have to be all-or-nothing. Many parents choose to pay a percentage of the total bill, cover certain expenses (e.g. tuition, technology fees or room and board), pay for a set number of years, or contribute as much as they are able to save by the first day of school instead of funding the full cost. Revising your college savings goal in one of these ways could allow you to direct more money to retirement. 

2. If your child has sights on graduate school, decide whether you will contribute to those bills too. This decision is particularly important if your child needs a graduate degree before entering his or her field of choice. If you intend to provide financial support, calculate how much the total cost will be so you have a clear savings target in mind. 

3. Discuss your intentions with your child. No matter how much you contribute, talk to your child (if and when your child is old enough) about your financial commitment so he or she knows what to expect. Discuss how your contribution will look like at their preferred colleges. For example, if you agree to pay a set amount, perhaps this money will fully cover community college, a substantial amount at a state school, and leave a larger portion of the bill outstanding at a private college. Breaking down the costs for your child can help him or her make an informed decision about how much student debt (or scholarships, grants, etc.) are needed to cover the bill.
 
No matter your financial situation, know that it is possible to make meaningful progress toward both goals, particularly if you are intentional about how to allocate your savings. Consult a financial advisor and tax professional if you want help setting specific savings goals and understanding the various investing options available to you.
 
(1) The Modern Money study was created by Ameriprise Financial, Inc. and conducted online by Artemis Strategy Group December 11-25, 2018 among 3,008 U.S. adults between the ages of 30-69 with at least $100,000 in investable assets. For further information and details about the study, including verification of data that may not be published as part of this report, please contact Ameriprise Financial or go to Ameriprise.com/modernmoney.
 
Creighton Hayworth, Associate Financial Advisor, is with Carolina Capital Advisors a financial advisory practice of Ameriprise Financial Services, LLC in Wilmington, NC. He specializes in fee-based financial planning and asset management strategies and has been in practice for 2 years. To contact him visit his website by clicking here or call (910) 821-9010. His office is located at 7741 Market Street, Suite F, Wilmington, NC 28411.
 
Ameriprise Financial Services, LLC. and its affiliates do not offer tax or legal advice. Consumers should consult with their tax advisor or attorney regarding their specific situation.
 
Investment advisory products and services are made available through Ameriprise Financial Services, LLC, a registered investment adviser.  
 
Ameriprise Financial Services, LLC. Member FINRA and SIPC.
 
© 2020 Ameriprise Financial, Inc. All rights reserved.     

Carolinacapitaladvisors2
Ico insights

INSIGHTS

SPONSORS' CONTENT
Untitleddesign14 3325110041

How Does the Property Tax Valuation Appeal Process Work?

Larry Shaheen - The McIntosh Law Firm
Jane

It’s Child’s Play

Jane Morrow - Smart Start of New Hanover County
Untitleddesign13

The Benefits of Choosing Local Partners in Construction

Jim Hundley - Thomas Construction Group

Trending News

Sound Off: Localizing Potential Medicaid Cuts

Mouhcine Guettabi - Jun 16, 2025

Laurie Whalin On Moving Up The NHRMC Ranks

Staff Reports - Jun 16, 2025

Islands In The Stream: Independent Medical Practices Remain

Cece Nunn - Jun 16, 2025

Trends To Watch: Health Industry

Vicky Janowski - Jun 16, 2025

Behind The Lens

Staff Reports - Jun 16, 2025

In The Current Issue

Natural Tendencies: Residents, Developers Look At Bald Head Island’s Future

The master plan includes detailed maps and schematics and addresses the three island locales authorized for commercial development....


Startup Founder Brings Others Together

Fleming’s day job is growing his social media marketing company Socialry, which he started five years ago. He’s also a local chapter organiz...


Center Offers Experiential Education

Since 2009, Zac and Celine Adair have worked to provide opportunities that go beyond the traditional classroom to foster personal growth and...

Book On Business

The 2024 WilmingtonBiz: Book on Business is an annual publication showcasing the Wilmington region as a center of business.

Order Your Copy Today!


Galleries

Videos

2024 Power Breakfast: The Next Season