We hear from so many clients that they have reduced their retirement savings so that they can put something away for their children’s college fund.  It is understandable that parents have a feeling of obligation to provide for their child’s education.  In a perfect world, you would max out your retirement contributions and still be able to save for college.  Of course, if you are living paycheck to paycheck – this is not possible.

We view retirement as the priority when you must choose between the two, and this is why.  There is no financing for retirement.  Unless you have a pension to look forward to, it will be up to you to make up the gap that Social Security does not fill.  That is why saving for your retirement is imperative.  You may plan to work part-time during retirement, but that plan may change as you age and desire the freedom to do other things.  The goal is to build up enough of a nest egg, that you do not exhaust it before you’re done spending!

When it comes to college, however, there are options.  Perhaps the biggest way to manage college spending is to limit choices to those that are financially achievable.  Once the field is narrowed, you can look to financial aid packages, scholarships (from schools and other organizations), work-study programs, grants and loans to make up the difference.

One thing is sure – when it comes to retirement or college savings – start early to maximize the magic of compounding!


Honorine M. Campisi, CPA