Why to Save for Retirement First, Your Kids' Tuition Second

retirement children
retirement children

Even when times aren't tough, no one has enough money to do everythingthey want. Nowadays, people have had to do some serious acrobatics to stretch their hard-earned dollars as far as they can.

But even if you dohave enough money left over from your paycheck at the end of the month, juggling between competing priorities is tough. One of the hardest decisions people with children have to make is whether to put money toward their kids' college educations or toward their own retirement.

It's only natural for parents to want to do everything they can for their children. Moreover, with student loans becoming an ever-larger part of financial-aid packages, many graduates are left struggling to repay their debt. Any money you can set aside for your children means less that they will have to borrow to finance their college educations.

Yet in the long run, you may do your kids a bigger favor by taking care of your ownfinancial needs. Most financial-aid calculations exclude parents' assets held in retirement accounts, meaning that putting money toward retirement could actually boost your child's financial-aid package.

Moreover, saving for retirement can put extra money back in your pocket. Putting money into a traditional IRA or 401(k) can give you tax savings that amount to thousands of dollars -- savings that you can then use to meet more of your financial goals.

Finally, by saving for yourself, you'll remove a potentially huge burden from your children down the road. Many people in the baby boom generation have had to deal with giving financial support not only to their children, but also to struggling parents who didn't save enough for their own retirement. Ending that cycle lets your children avoid the huge challenges of providing for their entire families.


Putting money toward your children's college education is a smart and kind thing to do. But make sure you don't neglect your own financial needs. By taking advantage of your chance to set money aside for retirement, you'll be in a much better position to help your kids down the line while hopefully steering clear of difficult financial situations in your future.

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Motley Fool contributor Dan Caplinger juggles his priorities like a circus performer. You can follow him on Twitter here.