DOLLARS AND SENSE

Common sense answers to questions on personal finance

by Joe Plemon 

Q:  Maybe you can help settle a dispute between my husband and me.  We have two children, aged 10 and 13.   I think we should set a high priority on saving for their college.  My husband says that our own retirement planning should be a higher priority, but I just feel like we are being selfish when we put ourselves ahead of our children.  What are your thoughts?   

A:  In a perfect world, you could do both, but your higher priority should be your own retirement.  I don’t consider this to be selfish because failure to plan for retirement could make you a burden to your children some day. 

             With college funding, there are options: scholarships, kids working, cheaper school, delay school or maybe even no college at all.  What options do you have for retirement if you don’t plan?  None!  Social Security, a guarantee of poverty living (if it is still available), is not a plan.

              I suggest that you and your husband focus on getting out of debt, building an emergency fund and freeing up a great cash flow.  From that cash flow, you should invest 15 percent of your income toward your retirement.  Any cash flow above that could go toward your children’s education.  If you don’t have the money for more expensive schools they need to attend community colleges and state universities.  They should commute from home if possible and plan on working, as in all summer every summer and part time while in school.  Even if you don’t have a huge nest egg saved for their college, it is possible for them to graduate without debt if you are wise and they are willing to sacrifice.  You will know that you helped and they will appreciate an education that they worked for.   And you will also have the peace of mind of knowing that retirement with dignity is in your future.