When given the choice between saving for their kids’ college education or saving for their own retirement, 56% of Americans said they would choose to save for their kids’ college, according to a recent Thrivent survey. This is in line with what Americans value most: 76% of Americans ranked family as a top priority versus 39% who ranked financial stability as a top priority.
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If you find yourself at this financial crossroads, how should you choose what to prioritize?
Also see tips for saving or retirement while paying off student loans.
Saving for College vs. Saving for Retirement
Many parents will encounter this dilemma: Should you put money toward your kids’ future or your own?
“There isn’t a simple — or right — answer here,” said Loren Hansen, vice president of Thrivent Advisor Groups. “At the end of the day, our hearts are invested in these decisions because they are tied to our values. For many of us, giving to our families and helping them thrive is an important value, and we want our financial decisions to reflect that.”
A good idea is to create a plan for your money so you can figure out how to best allocate your funds.
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“You can save for both priorities, but it should start with a written financial plan that outlines your specific goals and savings targets,” Hansen said. “With a plan, you’ll think through critical questions that will help you arrive at your ultimate vision.
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“For example, when it comes to college, are you planning to send your child to a public or private school? In state or out of state? Will you pay for their other expenses, like books or housing? For retirement, what’s your timeline? Where will you retire and what is the cost of living? What personal goals do you want to achieve? All of this impacts how much you need to save — and at what rate, over time.”
Because these decisions can get complicated, Hansen recommends meeting with a professional.
“A financial advisor can help you navigate these questions, develop and execute your financial plan, and provide clarity for everyday financial decisions,” he said. “They can work with you to bring your values, goals and financial decisions all together to form a complete picture. This thoughtful approach to planning can help you achieve what matters most to you in life.”
Gen Z and Millennial Parents Are More Likely To Prioritize College Over Retirement
According to the Thrivent survey, Gen Zers and millennials with kids believe that saving for their children’s college education is vastly more important than saving for their own retirement (75% versus 25% and 61% versus 39%, respectively).