Don’t Fall for This Myth That Pits Your Retirement Against Your Children’s Education, Expert Says
Written by
Nicole Spector
Edited by
Molly Sullivan
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Parents and other caregivers often hear the saying, “Put your own oxygen mask on first.” The point is, if you want to help somebody else survive, you have to ensure you’re doing what you need to do to survive first. We can easily see how this would make sense in a literal life or death scenario, but we may not quite grasp the importance of this logic in situations that are less urgent or clearly defined.
A 2024 study by Fidelity found that 84% of parents planned to either maintain or increase their regular college savings contributions that year — potentially tapping funds that would have been used for their own retirement savings.
Most financial experts, including Andrew Latham, CFP, content director for SuperMoney, argue that you should never put your retirement in peril in order to fund your kids’ education. In a recent blog on SuperMoney, Latham added dimension to this argument by busting the myth that “good” parents ensure their kids’ financial needs are covered at all costs. Latham asserted that one of the best ways to support your kids financially is to take care of your own retirement first.
There Are Loans for College but Not for Retirement
Yes, student loans are money pits and it’s really unfortunate that kids often have no choice but to get ensnared in them in order to get a college education. But these loans do exist and kids have their entire lives to pay them off, cumbersome as they are. There’s no such thing as a “retirement loan” and unlike college, retirement lasts (hopefully) a lot longer than college.
“Once you hit your 60s, time is no longer on your side. You can’t take out a ‘retirement loan,’ and catching up becomes extremely difficult,” Latham wrote. “What’s worse, your financial insecurity can become a burden for your adult children, defeating the very reason you sacrificed in the first place.”
A lot of adult kids end up financially helping their retired parents. That’s arguably more of a burden than student loans.
Helping Out ‘a Little’ Can Hurt You a Lot
Perhaps you think you can compromise here. You can give your kid $200 a month to help with the cost of college. What’s the real harm in that, if you have an extra $200 a month to spare? Latham dug into the math to show how this could hurt your retirement.
“Saving just $200 per month for 20 years at a conservative 7% annual return results in over $100,000,” Latham wrote. “Waiting even five years can reduce this substantially.”
Things To Do To Help Your Kids That Don’t Hurt You
There are measures you can take and moves you can make to help your kids without hurting your retirement. Latham recommended the following.
- Teach financial literacy: As early as possible, start teaching your kids about budgeting and saving. When they’re old enough, explain how student loans work and the best strategies to pay them off.
- Encourage affordable education options: Ivy League schools do carry prestige that can be a powerful tool in the real world, but, without a full scholarship, they’re incredibly expensive. Starting out at a community college and then transferring to an in-state school is a far more affordable path and it won’t break your career.
- Look into flexible college aid: See if your kids qualify for FAFSA, merit-based aid or work-study jobs to help offset the costs of college.
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