Midlife is a tricky time of life, financially speaking. If you have kids, it’s expensive. Especially if you choose to pay for all or part of their college educations.
It’s also a time when you realize that you don’t have decades and decades to save for retirement.
Like an object in a rearview mirror, retirement is closer than it appears.
So, assuming you want to pay for your kids to go to college, and don’t already have all the expenses saved up. And assuming also, that you want to save aggressively for retirement, how exactly will those two things work together?
Here are some ideas to get you thinking, from a family currently in the college/retirement trenches.
Reduce other expenses to free up cash for these goals.
By the time you reach midlife, you have a pretty good idea of the things that are important to you. So it’s a good time to take a look at how you’re spending your money and make sure it reflects those priorities.
Once you do, you will probably find that you’re putting money in places that don’t match what you feel is really important.
It might be something big, like driving a car with high payments. Or something small, like have premium cable channels that you never watch. Big or small, eliminating some of these expenses and directing them to retirement or college savings can help you meet those goals.
Create new streams of income or boost the ones you have.
For many of us, our time becomes more our own as we move into this phase of life. Our kids are older, and more independent.
As a stay-at-home mom, I’ve used that newfound time in a variety of ways, including creating a new stream of income from writing on this blog and other places online.
Combined with other college strategies, like scholarships and choosing an in-state school, that stream of income has gone a long way to pay for our daughter’s college expenses. It will then go to help pay for her brother’s.
My husband, a business owner who has been our sole income earner while our kids were growing up, has found his time freed up as well. Some of that time is spent on the golf course or doing community service, but he’s also putting extra time into his business and is being rewarded during these, his peak earning years.
That extra income is helping us to pay for college while saving for retirement at the same time.
If you’re stuck on where an extra stream of income might come from, check out the Found Money page on this blog.
If you need to choose one, choose retirement.
If you do much reading on personal finance, you’ll hear again and again not to sacrifice retirement savings because you’re saving or paying for college. It’s good advice for this reason: there are multiple ways to pay for college, but no one is going to fund your retirement for you.
Many of us are tempted to avoid this advice for one well-intentioned reason: We want to put our kids first.
But think of it this way: if you don’t fund your retirement fully you may not be able to do for your kids what you would like to down the road or, worse, need to rely on them in your golden years.
It’s like putting on your oxygen mask first on an airplane. Make sure you’re taking care of yourself, so you can in turn take care of them.
Are you saving for retirement and college at the same time? What’s working for you?
This post was brought to you by Genworth Financial. See also Tips for Planning Your Retirement.