7 Reasons You Shouldn’t Risk Your Retirement to Put Your Kids Through College

don't risk retirement

When you hold your child in your arms for the first time, everything changes — especially your priorities. Late-night feedings replace late-night movies, and providing for your family outweighs that new sports car.

As a parent, you’re used to making sacrifices for your child, so it seems natural to put aside your retirement needs and focus on their college fund. In one survey from T. Rowe Price, 52 percent of parents said saving for their kids’ college trumped saving for retirement.

But that’s a really, really bad idea. Here’s why.

saving for retirement

1. Retirement is guaranteed. College isn’t.

You have a 100 percent chance of retiring someday, but the same can’t be said about your kid going to college. The latest findings from the National Center for Education Statistics show that only 65.9 percent of students enrolled in college in the fall following their high school graduation. And not all of those kids will get their degrees.

I’m not trying to discourage you, but I want you to understand fully that you will retire someday — and you need to be prepared. In fact, you’ll probably retire earlier than you expected. According to the Employee Benefit Research Institute, in recent years, about half of retirees left work earlier than they’d planned. That fact is reason enough to put your retirement investing into high gear.


2. Two words: scholarships and grants.

Your kids can apply for scholarships and grants to pay for college. You can’t apply for those to fund your retirement.

Each year, the U.S. Department of Education gives out approximately $46 billion in grants and scholarships, according to Debt.org. On top of that, individuals, companies, foundations and other groups award roughly $3.3 billion. If your kids do the work of searching and applying for scholarships, they’re likely to find the tuition money — or at least part of it.

Are You Retirement Ready?

compound interest

3. Time is investing’s best friend.

If you wait to focus on your retirement account until you’ve fully funded your kids’ college savings, you’ll miss out on the power of compound interest — which means you’ll lose out on thousands of dollars.

Let’s say you have two children by the time you turn 30. You decide to focus the bulk of your savings on the kids’ college fund, so you put away money for them instead of your retirement. Then in your 40s, you begin to focus on retirement. You put away $375 a month from age 40 to age 65 and accumulate almost $500,000. Sounds good, right? That is, until you calculate how much you would have had if you had started saving that much in your 30s instead.

At age 65, your retirement fund would have topped $1.3 million. That 10-year delay in investing penalized you $500,000.

health care costs

4. Your retirement years could be expensive.

I’m not talking about all those cruises to the Bahamas. Hopefully, by the time you retire, you’ll be debt-free — including your mortgage. However, you will still face significant costs, especially when it comes to health care.

A recent estimate from Fidelity suggests a retired couple can expect to spend $245,000 on health care over 20 years (from age 65-85). That’s because as you age, you’re more likely to have health problems.

Keep in mind, though, that this amount doesn’t include dental care, over-the-counter medications and long-term care. HealthView Services estimates that when you consider additional health-related expenses — including vision, hearing, dental and co-pays — the total amount a couple can expect to pay could reach $395,000. That breaks down to more than $1,600 a month.

Are You Retirement Ready?

retirement family

5. You don’t want to be a burden to your kids later on.

I’ve actually had clients tell me their retirement plan was to mooch off their kids. “I took care of them for 20-plus years, so it’s their turn to take care of me!” Really? Is that how you want your children and grandchildren to remember that chapter in your life? And what if, God forbid, they couldn’t help you?

That’s not how I want to live out my retirement years. I want to leave my family with memories of vacations to Disney, trips to visit their Pop during the summer and stories told at twilight as I sit on my front porch in a big ol’ rocking chair. I don’t want to be worried about finances, and I certainly don’t want my family to worry about them.

Related: 30 Greatest Threats to Your Retirement

jobs for students

6. Today’s kids need to learn the value of hard work.

When you work hard at something, you develop a sense of ownership. With that also comes a sense of pride, confidence and accomplishment. That work ethic is essential to success in today’s workplace.

Unfortunately, many teens and young adults have not learned the life lessons that come from working for something. By allowing your children to fund their own college education, you are teaching them far more than just financial responsibility. You are teaching them that hard work pays off. That attitude will serve them well no matter what career field they choose.

Social Security retirement

7. You shouldn’t rely on Social Security for the bulk of your retirement income.

Seriously, do you want to trust your financial stability on the federal government? Me neither. Even if Social Security is still around when you retire, what it pays out won’t be enough to sustain a comfortable lifestyle.

Are You Retirement Ready?

According to the Office of Retirement Policy, if you retire in 2050, your monthly benefit will likely be around $1,950. Do the math. Do you really want to live on less than $24,000 a year? I don’t. I want to enjoy my retirement years and not worry about whether or not I can make ends meet. Yes, you can use the money you’ll get from Uncle Sam, but make sure it’s the gravy on the meat – not the meat.

For some reason, culture tells us a terrible lie: If you don’t pay for your children’s college, you’re a bad parent. The truth is that your kids have options to pay for college. They can get scholarships and work to fund their education, but you are the only option for funding your retirement. Yes, you love your children. But the depth of your love shouldn’t be measured in how much you shell out for college. It’s okay for you to take care of yourself.

Keep Reading: 9 Signs You’re Not Saving Enough for Retirement

A popular and dynamic speaker on the topics of personal finance, retirement and leadership, Chris Hogan helps people across the country develop successful strategies to manage their money, both in their personal lives and businesses. His new book, “Retire Inspired: It’s Not an Age. It’s a Financial Number” released in January 2016 and is a No. 1 national best-seller. You can follow Chris on Twitter at @ChrisHogan360 and online at chrishogan360.com.


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