How can I save for both retirement and college?


Q. I have a child who is 12 and I want to save for college but I’m already not saving enough for retirement — just enough to get the 4% match from my job. I feel guilty about it, though, and I know it will be a problem in the future. Am I doing the right thing or can I do this better?
— Mom

A. Like most parents these days, you’re in a tough situation.

College costs have become so expensive.

But while you can borrow for college, you can’t borrow for retirement, said Jeanne Kane, a certified financial planner with OneDigital in Boonton.

The average cost of tuition, fees, room and board for the 2023-2024 school year was $56,190 for a private college and $24,030 for an in-state resident at a public school.

“If you’ve ever flown, you’ll likely recall the flight attendants telling you to put on your oxygen mask first before you put it on someone else,” she said. “That’s because if you run out of oxygen yourself, you can’t help anyone else with their oxygen mask.”

Saving for retirement is the same. You need to take care of yourself first.

To get yourself on the right track, start by looking at your budget, and if you don’t have one, create one.

Kane recommends you consider the 50/30/20 budget rule of thumb.

Half of your income would go to needs, such as your mortgage or rent, car payments and good. Then 30% should be earmarked for wants, which include vacations and home projects, but also college savings for your child. The remaining 20% would go to savings, with 25% of that going to an emergency fund, which should be three to six months of expenses, and the rest to retirement savings.

That would be 15% of the budget for retirement, Kane said.

You said you’re contributing 4% of your income and your company is matching 4% for retirement, so in your case, 8% of your income is being saved for retirement.

“You’ll need to focus on increasing your retirement savings rate,” she said, recommending you try a budgeting app to help guide your spending and savings.

“The most important thing is that you want to know where you spend your money and how much you spend,” she said. “From there, you can look for opportunities to shift some into money saved.”

Kane also said you should check to see if you’re on track for retirement.

Here, she said you can use the “10x rule” as a good rule of thumb

“At age 67 your net worth should equal 10 times your salary,” she said.

Your net worth is your assets (value of your home, retirement savings, bank accounts, etc.) minus your liabilities (mortgage, student loans, credit card debt, etc.).

Kane said you can also look at this rule of thumb at different ages. Let’s assume you make $50,000:

  • At 30, your net worth should be at least 1x your salary or $50,000
  • At 40, your net worth should be at least 4x your salary or $200,000
  • At 50, your net worth should be at least 6x your salary or $300,000
  • At 60, your net worth should be at least 8x your salary or $400,000
  • At 67, your net worth should be at least 10x your salary or $500,000

“These numbers can help you gauge if you’re on track or if you need to make some adjustments in your savings,” she said.

If you’re not saving enough, she recommended several strategies to increase it, such as upping your retirement contributions when you get a raise and putting away any bonus money or tax refunds towards your savings.

Then you can turn to college

“If you find that you’re hitting your savings goals for retirement, take a small portion of the bonus/refund and put that into college savings,” she said. “This can help you start to slowly build college savings while also prioritizing your retirement savings.”

She also said as a parent, it is important to set realistic expectations with your child on what you can and are willing to contribute towards college.

“Determine that amount now so once you have your retirement savings on track, you will know your college savings goal,” she said.

Perhaps you may be able to commit to paying for community college or a specific dollar amount.

“Once you know, you want to start having these conversations now. Don’t wait until after your child has applied to ‘dream’ — or expensive — schools to break the news to them that you can’t afford to send them there,” she said.

Also have conversations with others in your child’s life — like grandparents — who may want to contribute to the college funding goals.

“Helping your child with college is important but it shouldn’t come at the cost of your financial security in retirement,” Kane said.

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This story was originally published in March 2024. presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.