Towards the end of the year, many are undergoing an annual review of their retirement funds. It certainly was a tough year and one of the decisions many parents are grandparents are facing is the difficult decision to either save for retirement or use funds to pay for their children’s or grandchildren's college education. Here are some thoughts on the matter:

Prioritize retirement over education

In most cases it is more important to put the financial needs of retirement ahead of college education. Here's why:

• Retirement funds will be used to cover your basic needs for daily life for as many as 20, 30 or even 40 years. While education for children is important - and expensive - it is secondary to your long-term well-being.
• Financial aid and numerous other programs are available for your child to take advantage of to help them afford college. This includes current and future student loan forgiveness programs.
• If necessary, your child can take out student loans. While it may take years for them to repay a student loan, they will have future income potential to do so. Your income will be lower or even stop upon retirement.

Ways to plan for both

There are plenty of opportunities to fund both retirement and college education in a tax-advantaged way. Consider funding basic retirement needs first, then look at educational savings accounts and related programs. Here are some suggestions:

• Start saving early. Use time to help grow the value in your retirement and education savings accounts. Take advantage of employer-provided 401(k) or similar retirement programs, especially if there is an employer match. After that, look into Coverdell Education Savings Accounts and Section 529 plans to maximize     your education savings potential.
• Research and apply for grants and scholarships. Start researching early, as there are college scholarships available for children as young as 5 years old!
• Consider in-state public colleges. They are generally less expensive than private or out-of-state colleges. If an out-of-state college is preferred, check to see if they have reciprocity agreements with your home state.
• Look into work-study programs. Many schools provide part-time jobs for students to help them pay for school while keeping up with their studies. These programs vary based on a student's financial needs.

Making financial decisions like this can be tough, but with proper planning and insight, a path that works for you can often be found. Call if you want to discuss your specific situation.

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