To find out how Morningstar.com users are tackling these competing priorities, I recently posted a query on the Personal Finance Forum
of Morningstar.com's Discuss boards
. Specifically, I asked users whether they were favoring college or retirement funding, or had managed to strike a comfortable balance between the two.
To read the complete thread or share your own thought process on this complicated decision, click here
Many users were trying to do both, while also acknowledging the difficulty of doing so.Jeffsox9
summed up the conundrum of parents who are also hurtling toward their own retirement years: "It feels like there's never enough money for either. All of the experts espouse that retirement comes first, as kids can get loans for school and no one will loan money to a 90-year-old with no assets. Trouble is, most kids today pay 7% or more for a the most basic of government student loans. I would like to be able to give my children a leg up so they can come out of college without a huge amount of debt."Mattn5
would also like to do all he can for his kids, though he too noted the challenges of doing so. "I try to do both at the same time. While I'd love to put $200 per month for each child into a 529 plan, I just can't afford that. As a compromise, I'm putting $100 per month per child in today with the hope of doubling this in the next three to four years. I believe that my daughters should get the opportunity to attend the best college possible, which is why I'm prioritizing it somewhat."
argued in favor of staying flexible. "If your retirement accounts are well-funded during the college years, you can contribute nothing to retirement and all to college. Alternatively, if your college costs are funded you can contribute more to retirement. I think the bottom line is to accumulate funds--mostly to retirement and some to college--so you are in a good position to make adjustments during college expense years. I try to accumulate the cost of public colleges, and if our kids go to private schools at least we have about 50% of the costs covered."
, having paid for college while simultaneously saving for retirement, noted that doing so didn't come without significant personal sacrifice. "Because almost my whole career has been with one (academic) employer, and I've been required all that time to contribute 15% of every paycheck to my 403(b) (actually 5% of my before-tax salary, matched by 10% from my employer), I couldn't give my retirement savings short shrift.
"I was able to gradually put together savings (plus current income) that paid for about two thirds of my kids' college costs (in private colleges), with the remaining one third coming as a gift from my parents. My son and daughter were told they could major in anything they wanted to, but the one thing they could not do is take more than four years to graduate.
"Part of our college savings came by staying in our starter house and later on deferring home maintenance for several years, as well as keeping our car for 13 years.
"The kids each emerged loan-free with their undergraduate degrees, while we emerged owing that home maintenance and desperately needing a new car. With our home paid for but our savings gone, we went back into debt with a home equity loan to pay for home repairs (roof, furnace, and so on) and a new car.
"The goal now is to pay off all debts before I retire in two to three years. If we do that, then our accumulated investments plus Social Security should be quite adequate for retirement."