January 21, 2010

Saving for Someday: College For The Kids Or Your Retirement



My vision of retirement involves something similar to the picture above.  But right now I’m wondering if I’ll ever get to retire with everything else that needs to get done and saved for before I can officially say I’m retired.  Then again, can a mom retire?  Hmm, I’ll have to explore that one further.

In the mean time, I have a few years.  According to the Centers for Disease Control, the average life expectancy in the US is about 78 years.  That seems old.  Then I remember that my grandma is 89 and still lives on her own and drives her own car.  So I might have another 50 years.  50 years?  That’s a long time!

Over the next 50 years I will get my daughter through high school, college, graduate school, marriage, babies and so much more.  College?  Graduate school?  Who’s paying for that?  Oh, and a wedding.  Tradition says the bride’s parents pay for the wedding, right?  Maybe I’ll just send her to a good graduate school so she’ll make a ton of money and pay for it herself.  Does that count as retirement planning?

Thinking about all these things is very overwhelming to me.  And I can imagine it’s overwhelming for you too.  If I had actually listened to my mentors when I was in my 20s, I would have saved like a crazy person starting then.  But I saved some, and  also ‘rewarded’ myself for having gone through 9 years of college and grad school.  So what to do now?

How do I choose between saving for my retirement and saving for my daughter to go to college?  I’m torn.  Isn’t it my responsibility to do all I can to help my child go to college?  Isn’t it part of being a good parent to save to send your children to college?  If I send her to college will she then take care of me when I retire?  All these questions and no one to really answer them and tells me what to do.

After reading about the goals of financial planning for maximizing wealth, I have come to the conclusion that I need to save for my retirement first.  After having my emergency fund in place, the goal for a good portion of my savings is retirement.  There are many different ways to save for retirement – 401(k), SEP, IRA, Roth IRA, mutual funds, stocks/bonds, etc.  Each of these offers different benefits and drawbacks and only you can decide which vehicle is best for you.

What about saving for my daughter’s college?  Of course some money will be put aside for that.  With the long term rate of return on my side even a small amount can grow to something useful over the  next few years.  Even $25 every month can turn in to a sizable fund by time college rolls around.

As I’ve read more and more about retirement and financial planning, I’ve come across one significant difference between my daughter going to college and my retirement — there is no such thing as a Retirement Loan!  Student loans, grants and scholarships will continue to be available to college students well into the foreseeable future.  There never will be the equivalent for my retirement.

So, dear daughter, know that I love you deeply.  And because I love you so much, I am funding my retirement ahead of your college fund hoping that you will appreciate not having to pay for my retirement.


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