Should You Tap Retirement Savings to Fund College?

Many parents wonder whether they should use retirement funds to pay for college for their children. If your child is looking at attending college in the near future and you’re looking for ways to help your child with their college expenses, you may be planning to dip into your retirement fund. But is this the best financial decision for you and your family? Although 30 percent of parents intend to use their retirement funds to pay for their children’s college education, this isn’t the right course of action for all parents. At DunnCreek Advisors in St. Paul, MN, we want to be sure that you make the right financial decision for you and your family, and we’ll help you evaluate the advantages and disadvantages of funding a college education with retirement savings. When you’re trying to decide whether to fund your child’s college education with your retirement savings, consider the following three factors:
1. Retirement is a Necessity
It’s important to remember that parent-funded college education is a luxury, not a necessity, whereas accumulating a large enough retirement savings fund to ensure your security after retirement is a necessity. Your security during retirement should be your first priority, especially if you intend to support your child in any way after retirement. To be sure that you have enough in your retirement savings to get by after your retirement and still contribute to your children’s wellbeing, make retirement savings your number one priority, and consider whether you can realistically afford to dip into your retirement savings to pay for a college education for your child.
2. Alternative Ways to Fund a College Education
These days, there are a number of ways for students to pay for college that do not involve you using retirement savings to pay for your child’s education. There are scholarships, grants, help from extended family, and contribution from the student to consider before making the decision to use your retirement fund on college expenses. If there are alternative ways to fund your child’s college education, pursue those first before looking into using your much-needed retirement savings.
3. Look into Less Expensive Colleges or Universities
If your child is looking into expensive schools, consider helping them find less expensive universities or colleges to apply to. State-run schools and junior colleges are often less expensive colleges than private schools or large institutions. If your child does have his or her heart set on an expensive school, make sure that they look into the scholarships and grants awarded to students at those schools to see whether there are any large schools that may provide enough financial aid to make them as cheap as some smaller schools or junior colleges.
When making the decision of whether to use your retirement savings to fund your child’s college education, be sure that you consider all of the options and prioritize your future financial security. For more information on financing your child’s college education, contact our St. Paul, Minnesota financial advisors at DunnCreek Advisors at 612-436-3770 or rdunn@dunncreekadvisors.com.