Assuming you have the funds to do so, and that these funds are limited, you are trying to to decide between contributing to retirement savings or to anticipated future college expenses for your child (or children). How do you choose?
This can be an emotional issue, and that should not be discounted when making this decision. This post focuses on the retirement side of the issue: sacrificing retirement savings now can affect both your future and future burdens on your children.
You have more limited options once retired.
Once retired, you have more limited options should you need to borrow money.
In retirement you will need to replace a percentage of your pre-retirement earnings. You’ll need a place to live, a means to meet your basic expenses, a way to meet what will certainly be continually increasing healthcare costs while hopefully having some money left over to spend as you wish. These variables can be estimated because you have years of experience with real costs.
Don’t make the mistake thinking that you can simply forego contributing to retirement savings for a period of time leading up to a child entering college. Those foregone contributions will have a very large negative impact on your ability to retire later because you will have lost the compounding effects.
You have more options pre-retirement with funding college expenses and making education choices.
With anticipated college expenses, you have more options to meet them with greater flexibility. You and your child can and should consider costs when making choices. Student loans can be used. Scholarships and grants are available. Many financial aid packages are available.
At the same time the level of uncertainty for the college experience is rising. College is likely to be a very different and unforeseeable experience in the future. The widely accepted current view that college is a necessity for everyone will be questioned, as it should be.
Recommendation
If you are like most people and cannot fund retirement and put aside money for future college expenses, comparing limited options for retirement with the increased options and flexibility for college as well as the increasing uncertainty makes focusing on retirement savings a better choice.
What if you end up saving more for your retirement than you need later? That has three important benefits: your children will not be financially burdened by having to support one or both of their parents, you can always give money to your children later if you wish, and you have the option of helping them pay off student loans along the way.
If you have the means to contribute to both retirement as well as future college expenses, consider yourself fortunate.