It’s a common scenario: A child gets into a college that ends up being more expensive for a family than they expect -- or more commonly, they have no idea what they will be expected to pay out of pocket for a specific school. Parents scramble to figure out how to pay for school and decide to divert money they are putting into retirement towards college.
That ends up being 4 or more years that money is not being put into retirement. And to make matters worse, many families have multiple students. So, it can end up being 8+ years that funds are diverted. And that choice can push back retirement for at least as many years. Are you ready to retire at 73 rather than 65?
Assessing Retirement Readiness
In chapter 8 of Never Pay Retail for College, we talk about retirement readiness and cash flow for college. Before we can even begin to calculate how much we can afford for school, we need to understand our readiness for retirement as parents.
Remember, our kids can get scholarships and loans for college. We cannot get them for retirement.
Good college planning begins with retirement planning. Once retirement goals have been established, you can back into formulating a college budget. Too often, parents launch themselves into the college project, only to discover they have overextended themselves.
So be sure to figure out your retirement readiness before trying to understand the amount you can afford to spend on college for all your kids across all their years of college. You will be glad you did as you get closer to retirement age.