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College,  Savings

Should You Save For Retirement Or College?

The struggle is real. I talk to parents all the time who ask me flat out - should I save for retirement or save for college? Many parents who had some or all of their college education paid for feel intense pressure to provide the same opportunity to their children. However, the incredible rise in college costs makes that goal feel impossible.

The case for saving for college

I see new medical professionals with enormous debt loads starting their careers and their families at the same time. To them, saving for their kid’s college is vitally important because they don’t want their children to experience the same stress they feel when they open their student loan statements.

Or...saving for retirement?

On the flipside of this is your retirement. Even if you view your career as a calling, that doesn’t mean you want to be answering your cell at all hours forever. And let’s be real for a minute - like many of you, even though I would love to work in some capacity for as long as possible, life happens. I could become ill or disabled. Someone in my family may need care and I could choose to be the one to provide it. I’ve seen illness and disability strike the families of my clients and within my own family, rearranging lives and changing carefully laid plans.

The reality is, I want to be able to make that choice - to keep working or not. My guess is, you want to have that choice as well.

I have three potential answers for you to think about when grappling with the question of how to balance out those competing interests.

Answer #1: The textbook answer

Retirement has to take precedence over saving for college. I’m sure you’ve heard “you can borrow for college, you can’t borrow for retirement.” This is true, but it tends to ignore the emotions behind that question of how to save for retirement and college. And no matter what we tell ourselves, money is deeply emotional.

Answer #2: Save for both

Haphazardly save for college and retirement at the same time and constantly feel as if you aren’t doing either one well. Twice the sense of failure for the price of one!

Answer #3: Get creative

To start, we have to be honest about what is most important to us and explore the possible consequences. If we decide to put all of our eggs in the college basket then we have to acknowledge the real risk. Namely, that in attempting to avoid burdening our children with college debt we may inadvertently burden them with our care as we age. Yes, you will get old. Sorry.

Next, we have to acknowledge that we may not be able to reach 100% of our goal, and that is OK. I repeat, that is O.K. By staying flexible we can adapt and get as close as possible.

Finally, making the decision to save for retirement and college can definitely be a time where we get in our own way. Instead of just starting to save we paralyze ourselves trying to figure out the “best” way to reach our goals.

Insert “Panic”

It is usually about this time we turn to some trusty financial calculators we found on Google to tell us what to do. We make up some numbers or rely on their assumptions and hit “enter.” If we rely on calculators alone to make this decision we tend to get a bit shell-shocked at this point by the amount of money involved. Then in a “fight or flight” panic we see our choices as “all or nothing.” You either save thousands of dollars a month for college or nothing.You either meet your goal or you fail.

Opt-out of the pursuit of perfection

Let’s flip that script and pursue the third way - we acknowledge that we don’t know for sure if we can meet our goals but no matter what, we’re going to start today. It’s not all or nothing. We can do something. I would be remiss if I didn’t tell you to focus on retirement, but, if saving for college is a deeply held value for you, I also want to give you permission to siphon off a little of that savings into a 529 college savings account.

Stay Flexible

Don’t forget that things change, your incomes change, and our spending changes. We often overlook the fact that there are inflection points in our careers and spending. For example - making partner at our firm, getting the kids out of daycare (or diapers for that matter), seeing a business venture take off - all have significant impacts on our cash flow. When those events happen we need to quickly reallocate our cash flow into our savings buckets.

What we need to do now in anticipation of those events is to start the savings habit. Really, building strong financial habits is the key to building long-term financial freedom. That’s why I’m less concerned with the dollar amount my clients start with, and more concerned with the fact that they actually started saving.

Once you start saving it’s helpful to set automatic reminders in your phone to remind you to increase your savings. Every 6 months is a pretty good starting place. That’s what my husband and I have done with our college savings accounts.
For a while we were doing a great job saving for retirement and college - then we had more kids and our work and income situations changed. Although I am happy and accepting of those changes (because they are reflections of our values) I still want to kick our college savings back into gear.

You can do this

Using this strategy - of simply increasing our savings every 6 months by a small amount and with every raise earned, we have increased our monthly savings rate by 150% over the last 2 years. In fact, writing this article inspired me and I went in and increased our monthly debit for our college savings account. We’re not to our ultimate goal, but we are getting closer.


You can, too. If reading this article made you realize that you need to focus on saving for retirement now, that’s great. Email yourself a reminder to your work email address to start contributing to your retirement plan or increase your contribution by 1%. Want some help remembering to increase your savings? Drop your email address in the form below.

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If after reading this article you think, “I want to save for retirement and I am able to save for college as well,” then use this checklist:

Here are the key actions

Start automatic long-term savings for you (401(k), IRA, etc.).
Open and fund a new 529 savings account.
Set up a small monthly contribution to your 529.
Set up a reminder in your phone for 6 months out to increase your retirement savings and college savings.
Don’t be afraid to ask for one-on-one advice if you need a clearer idea of how much to save or getting some clarity on your cashflow/budget.

Saving for retirement and college can feel daunting but it doesn’t have to be overwhelming. The best action to take is to simply get started. Don’t let yourself be paralyzed by the idea that you have to make the best decision. Sometimes just getting started is the hardest step.

Are you saving for retirement? Before you rely on an online calculator read this: How much do I need to save for retirement?

Talking to your teen about the cost of college and student loan debt? Read this to help the conversation go more smoothly.

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