Friday, September 18, 2009
Where we used to live in Northern California, news came recently that a couple just put their retirement home up for sale (purchased in 2007, ouch!) after the recession had taken a toll on the business owner's income while the college tuition bills just kept coming.
As said business owner was of the view that the U.S. economic slowdown was nothing more than a "media-created" event as recently as a year ago, his plight will not elicit any sympathy from these quarters but, based on this story at CNN/Money, he is surely not alone.
As much as a college diploma may assist today’s youth with their future employment, paying for that education is giving their parents a severe headache. New surveys released by Fidelity Investments, the College Savings Foundation, and Sallie Mae have found that parents understand they’re not saving enough, are worried about it, and are even planning to delay their own retirement to pay their kids’ tuition..The approach to saving for both retirement and college that seemed to work so well earlier in the decade (i.e., figuring that your rising home equity will not only fund your kids' education but your golden years as well) is, sadly for many people, not working so well anymore.
Make no mistake, college is expensive. This year’s numbers aren’t out, but college costs have risen 23% since 2000, after inflation. It’s great that many parents are willing to delay retirement a few years. But if it comes down to a decision between retirement savings and college savings, don’t feel guilty for making your kid finance his education or work his way through school. If you’re able to save more down the road, you can always help him pay off his loans, but no bank is going to lend you money to supplement your retirement savings if you come up short.