Will Your Kids’ Cap and Gown Kill Your Retirement Plans?

Don't sacrifice your hard-earned future for your children's.

Relatively speaking, a cap and gown might be the most expensive outfit you’ll ever wear. With college costs soaring — and showing no signs of slowing — the price for a quality education has become a serious sticking point for many American families.

But parents still want to set up their children for success, and that typically means footing the bill for education. Although that was completely feasible less than two decades ago, Chris Hogan, the author of “Retire Inspired: It’s Not an Age, It’s a Financial Number,” urges American families to rethink the traditional “paying for college” milestone.

Read: Avoid These 11 Money Mistakes People Make in Their 40s

Adopt the “Save Yourself First” Mentality

Paying for your children’s college tuition is one of the greatest threats to your retirement. Only 56 percent of kids who head off to college wind up graduating — whereas there’s a 100 percent chance that Mom and Dad are going to retire. It’s time to think about the reality of those odds — and make your financial game plan around the realistic outcome.

“We have to make wise choices,” said Hogan. “If they spend all their time, effort and money sending their child to higher education, the parents could actually end up being a burden to that adult child.”

That’s a startling reality many parents haven’t faced yet. According to a 2018 GOBankingRates study, about 42 percent of Americans have less than $10,000 saved for retirement — that’s nearly half the population. Without preparing for your own future, you’ll be of absolutely no use to your children — and potentially be a hindrance to their own futures.

Use Getting Into College as a Teaching Tool

Even though college itself is all about education, the learning process should start before they even choose their higher education plans. Use the college planning process as a valuable teaching tool for your children, explaining the financial reality of their situation and urging them to evaluate and play a role in their own future.

“Look at it as a business decision,” he said. “This is what it costs to go here, this is the amount we have and this is what you can get in scholarships.”

Alternatives to Poaching Your 401k

There’s a number of creative ways to pay for college without draining your retirement fund dry.

“You could have scholarships, grants … you could have that adult child work full-time and go to school at night,” he said. “They can go to community college and knock out their prerequisites.”

Sit down with your child and be realistic about their dreams — and their capabilities. If your child is still unsure of their major, community college could be a wise choice — and there are plenty of high-paying jobs that only require an associate’s degree. If full-time work and full-time school seem out of reach for them, potentially opt for a part-time route.

Although these paths don’t necessarily have the same appeal as the “going off to college” experience, they will ensure that both you and your child avoid footing a crippling student loan bill that threatens the futures of both parties.

“Listen, I’m a parent of three boys so I understand the love of that child,” explained Hogan. “I think it’s also a matter of being aware…and let’s teach kids about money.”

Click here to keep reading about debts you need to tackle before you retire.