Faith & Finance

Rob West

Save for Children’s Education or Retirement

July 14, 2020
00:00 40:07

Most parents (especially those in their 30s and 40s) are faced with a tough decision often pitting the heart against the head. Do we save for our children’s education or for our own retirement? Everyone has limited resources to some extent and that often leads parents into a quandary, choosing between college or retirement. Today on MoneyWise, financial planner and teacher Rob West enters the debate!

•          We often hear from parents who are struggling with the question of saving for their kids’ college or investing in a retirement plan. However, it doesn’t necessarily have to be a choice between one or the other. If you can put something aside for both then that’s the best way to go.

•          You should know that median household income has risen 135% in the last 20 years, not accounting for inflation. That sounds good, but the average tuition at a 4-year public college has risen—are you ready for it?—by 550%!

•          So again, ideally, you’ll want to save for both. But this dilemma is something that every parent has to consider after much prayer and perhaps consultation with a financial advisor. The wiser financial decision is to save for your own retirement first. But that doesn’t have to mean 100% of your savings in one and nothing in the other. Just put a higher percentage into retirement.

•          One reason that retirement is the priority is because it has changed over the past few decades. Pensions are now a distant memory for most workers and Social Security isn’t sufficient to meet one’s income needs. Besides, that program’s revenue is projected to fall below benefit levels by the year 2035. Workers must take responsibility for their own retirement needs, and we always recommend investing 10 to 15% of income in a qualified retirement plan.

•          Parents and students can take steps to minimize college borrowing. First, if you have any money left over after monthly retirement contributions, open a 529 education savings plan. Even $50 or $100 a month will make a difference by the time your child is ready for college. Next, consider a less expensive community college for the first two years and then transfer to a 4-year school to complete a degree program. Also, some schools now offer online programs at lower costs than attending in person. Students can also look for internships and part-time jobs to help defray the cost of education.

 

Here are just a couple of questions answered from our callers on today’s program:

 

•           When I did my taxes this year there was something I forgot to report! What should I do? What about an amended return?

•           Is it safe or wise to withdraw from my 401(k) (mine’s a traditional IRA account) to pay off student debt or a car loan?

 

Ask your questions at (800) 525-7000 or email them at questions@moneywise.org. Visit our website at moneywise.org where you can connect with a MoneyWise Coach, purchase books, and even download free, helpful resources.

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About Faith & Finance

Faith & Finance is a daily radio ministry hosted by Rob West. The program offers a practical, biblical and good-natured approach to managing your time, talents and resources.

About Rob West

Rob West is the host of the nationally syndicated radio program Faith & Finance heard on more than 900 radio outlets each day. Rob also serves as the President of Kingdom Advisors, an international community of financial professionals who are specialists in delivering biblically wise financial advice. Rob serves as primary spokesperson for the organization and gives leadership to organizational strategy.

A radio veteran, Rob previously co-hosted a live, call-in, financial radio program with his father from 1998 through 2008 at WAFG, Fort Lauderdale, FL. Rob has dedicated his professional career to working at the intersection of faith and finance having led a successful faith-based financial services firm, serving as the host of several radio programs on a biblical approach to finance, and speaking frequently on the topic. Rob and his wife, Julie, live in Marietta, GA with their four children.


 

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