Booklet

author

Shang

Finance & Accounting

Saving Retirement VS Saving For Children's College

Saving Retirement VS Saving For Children's College

The Framework

  • How long do I have to save for retirement?
  • How long do my children have to save?
  • Can my children learn and watch now?

Put your oxygen mask on first

  • Your own retirement should always be prioritized over your child's education funds
  1. Your child is younger. They can catch up
  2. If you do not have a retirement, your child may need to help you, which creates a burden for them and an even shorter horizon for them to invest for you.
  3. . Your child can save on education costs by attending a community college and then transferring after 2 years, attending local / publicly funded schools, and applying for scholarships.

Put your oxygen mask on first

  • That being said, you don't need to have a fully funded retirement, to start contributing to your children's education
  1. Use an online calculator to ensure you're on track. Example: if investing 20% of income a year finishes your retirement fund, then any more savings above that can go to children
  2. Not sure your children's education withdrawals qualify? 529 / ESA contributions are subject to some taxes and a 10% non qualified penalty, so if you're unsure, put excess in a brokerage.

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