Things to Consider When Stuck Between Retirement and Your Kid’s College Tuition
It is the parents’ job to provide for their kids and support them in matters of food, shelter, finance, and education. Everyone has their own capacity to spend on their children yet, every mother or father makes sure that they are doing the best they can within the limited resources they have. People make those decisions on the type of lifestyle they can afford and the jobs that they have.
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Unfortunately, things don’t always work out the way we plan. There are multiple factors that can go wrong in the journey of life. A natural disaster could affect your way of life, or a job that you did not intend to leave is laying people off. These things are unprecedented and can happen to anyone and change the course of their lifestyle. Then there are things that shake the very foundations of your plan, to begin with, this could mean a divorce from your partner and then marrying someone else, late marriage, problems in conceiving, or late adoption. All of these can put a huge dent on your budget calculations.
Things like these can result in you reaching retirement age before even your first kid has graduated from college. It can amount up to a lot of pressure for the people trying to save money for retirement and in addition to that, also have to deal with the stress of sending their children to the college they desire. Moreover, it’s not just the college expenses that are hard on the parents’ pockets, throughout the kids’ lives, parents are investing in their offspring. A survey has found out that the total cost of raising a child up to 18 years of age can be a minimum of US $250,000. This does not include the costs that any complication in the child’s health that may have been the reason for even more expenses. A baby could be born with a physical deformity that needed to be treated. It could be that in the course of life the child acquires an illness that requires urgent care and drains the money from the parents.
Due to the ever-rising costs of college fees, despite inflation, people who are in retirement age are forced to work for more years than they had previously anticipated. Due to this, only 51 percent of the population has funds for an emergency even though financial experts have regarded this type of funding necessary. Even more alarming is the situation, where only 54 percent of the people are saving for their retirement and investing more on their kids. This situation has arisen not only because the parents are worried about their kids, but the children’s expectations are a part of this changing trend. 62% of college age students assume their parents top support them financially for going to college.
Although it seems like the only option is to skip saving for your retirement and invest in the college education of your offspring instead, it is unwise to skip saving for your retirement. This is because there are plenty of options available for funding a college education while there are barely any support systems in place which help people in their retirement plans.
When you have started saving up more for your retirement plan then you’d also be at an advantage in the long term when it comes to interest in student loans. This is due to the factor that not many financial aid programs would look into your retirement savings, hence not considering your loan interest rate when they calculate the expected financial contribution by the family. Yet they will factor in the savings you have made for the education of your child.
Furthermore, it is getting painstakingly harder for students to decide on majors with the shifting economy and ever changing technology. Jobs that exist now may be done by artificial intelligence in the next decade or so, making their degree useless. These reasons give high school graduates to doubt themselves and drop out from college midway and shift to another field. The parents who are saving up for their child’s college tuition must encourage their children to decide offhand by experimenting with different options and what field of education they wish to pursue. This would enable them to make a concrete plan of action as to what career path they will be heading towards in the future.
It is always recommended to take care of your future post-retirement so that you would have a stable ground to work on. While paying for a college education can be a tricky experience, but getting loans after retirement for your personal expenses is next to impossible. So plan accordingly and live well in your old age.
Author: Rachel Everly