Seven Ways to Balance Retirement Planning with Your Children's Education (Free Money Finance)

October 04, 2005

Seven Ways to Balance Retirement Planning with Your Children's Education

Here's a multi-page graphic from Forbes offering "Seven Ways to Balance Retirement Planning with Your Children's Education". Their suggestions:

Start Early. You should start saving for retirement early, even if your initial contributions to a 401(k) Plan are small. Increase the monthly contribution as your salary grows. The sooner you start, the bigger your retirement nest egg will be.

Automatic Pilot. Have contributions to your retirement plan automatically deducted from your paycheck. If you don't, there will always be something each month that demands your money. Pay yourself first.

College Savings. Invest extra money in a college savings plan. If you receive a bonus, tax refund or an inheritance, put aside a good chunk of it for your children's, or future children's, college fund.

Scholarships. Your student should apply for scholarships and financial aid. Start doing your homework at least a year before your student sits to freshman comp, and you'll find an array of scholarships and aid packages to help with the hefty tuition bill.

Kid's Participation. Encourage your student to help foot the bill for college. If handled properly, summer work and part-time jobs during school won't interfere with studies. Having your student kick in some cash teaches the child the value of a buck and gives the kid a financial stake in the successful completion of a degree.

Student Loans. Consider a student loan before putting your retirement savings on hold. The current interest rate on educational loans is about 3.5%, making it possible to finance a large chunk of college with low monthly payments.

Other Choices. Think about taking a loan from your life insurance to help pay for college. You can do this without denting your retirement savings, and you may need less coverage when your kids are grown.

I have written a lot on both retirement and saving for college. Here are a few posts you may want to review if you want additional information: