Balancing Your Retirement Fund With College Savings for Dependents | Cleveland Bradley County Teachers Federal Credit Union

The cost of higher education has been on a steady incline in recent years, and there are no indicators that the trend is going to change any time soon. For parents with children who have their sights set on college, this means that if you are helping out your child with expenses, college funds have to be started earlier and contributed to more heavily than ever before.

Additionally, many parents find themselves in this situation while also saving for their own retirement—which is quite the conundrum, indeed! Retirement costs are also rising, with 80% of retirees needing to have sources of private income other than Social Security in 2019.

This may seem like a lot to juggle, but below we have some tips for how you can maximize your savings opportunities to make it all work.

How to Maximize Your Savings for College and Retirement

Give your 401(k) contributions priority. While we all want a good future for our children, most financial advisors recommend making your own retirement contributions your top priority. Maximize your 401(k) savings by taking advantage of employer matching, and consider also contributing to an IRA to save on taxes.

Save smart for college. Instead of simply setting up a savings account for your child’s college fund, utilize a 529 plan, which is specifically designed for college savings. When you contribute to a 529 plan, there are often tax benefits that you can take advantage of to recoup some of that cost.

Choose payments over presents. If your children are already set up with toys and playthings galore, consider asking for college contributions for their next birthday or Christmas. These can be put into the 529 plan as well, which will be a much better future investment than a toy that will be outgrown. You can start this from an early age to maximize savings, too!

Automate what you can. Automating any type of savings is a great tip for making sure you are contributing regularly, and saving for both college and retirement is no different. Automating your 401(k) contributions and contributions to your child’s 529 plan is a smart option.

Curious about how to better hit your savings goals? We have a variety of accounts to help you reach them—contact us today to learn more.