Your retirement or your kids college?

college or retirementSo, you’ve come to the point in time where you’re debating whether you should save for your own retirement or divert those investments to the future well being of your children. The truth is, research has shown nearly 15% of investors with children under 18, choose to invest in their children over themselves. Is this the right move or not? The answer may surprise you.

How will your kids be able to afford college if you don’t do something for them now? Will they hate you if you don’t do anything for them? Is it your responsibility to do something for them, and forget about your needs? Below, I will walk through the reasons you should consider holding off investing in your child’s education, and instead focus on your own retirement needs.

Too many people allow their emotions to control their mind, and they make poor financial decisions as a result. Just because you think and or know it’s your responsibility to fund your kids educational needs, doesn’t mean you have to do it now, and at the sacrifice of your retirement.

There are alternative means to help them down the road, instead of investing the little you can on them now, you should be putting that aside for your own retirement. Case in point, your kids can take out loans (and or you can take out parental loans on behalf of your child to pay for their education), but you can’t take out a loan to fund your retirement.

Parents should first focus on building their own nest egg, only when they feel comfortable that their needs for retirement have been met should they move to funding educational accounts for their children, such as 529 plans, or Coverdell Savings Accounts. It’s not that you don’t care about them, it’s the smarter financial decision.

A better idea would be to take the opportunity to fund these investments for them instead of buying them toys or other crap for birthday gifts or Christmas or other holidays.

Just because something seems like the best thing to do, it doesn’t mean it always is – you must weight the pros and cons and determine what is the best possible financial decision you can make – and stick to it.