The first step is to determine your financial needs for each goal. For retirement, some of the main considerations would be how many years you have till you want to retire, the standard of living you hope to have in retirement and your income streams, such as Social Security. For college, consider such things as how many years until your child starts college, what is the expected cost for college, does your child have special academic, athletic or artistic skills and do you have more than one child who could go to college. In addition, there are many online calculators available to help you predict your retirement income needs and your child’s college funding needs.
The next step is to determine what you can afford to put aside each month. To do so, prepare a detailed family budget that lists all of your income and expenses. Keep in mind, though, the amount you can afford may change from time to time as your circumstances change. Though college is certainly an important goal, you should probably focus more on your retirement if you have limited funds. For most people, the burden is primarily on you to fund your own retirement. If you wait until your child is in college to start saving, you’ll miss out on years of potential tax-deferred growth and compounding of your money. Remember, your child can always attend college by taking out loans (or maybe even with scholarships), but there’s no such thing as a retirement loan!
Ideally, you’ll want to try to pursue both goals at the same time. The more money you can squirrel away for college bills now, the less money you or your child will need to borrow later. Even if you can allocate only a small amount to your child’s college fund, say $50 or $100 a month, you might be surprised at how much you can accumulate over many years.
If you’re unsure about how to allocate your funds between retirement and college, a financial advisor at TFCU Financial Advisors can help you establish a plan that can assist you in preparing for your child’s college costs and your retirement.
TFCU Financial Advisors
6501 Tinker Diagonal, MWC
(405) 737-0006
TFCUFinancialAdvisors.org
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