Retirement or College Savings?
If a friend casually asked you during a conversation whether you believe saving for college or retirement is at the top of your list, what would you say? Surprisingly, many harmonize together to a similar tune: retirement.
Why, you may wonder? According to the Wall Street Journal, it’s a simple answer: strategies for retirement plans limit to saving, while college bills can be funded by a wide array of options. Only about 27% of college tuition was covered by savings for the 2012-13 school year.
This doesn’t mean you absolutely 100% need to extract a student loan (or two), but there are unforeseen benefits in paying them off properly. In fact, taking on student loan debt leads to a tax write-off with the paid interest. Tax breaks for retirement are slim and tend to be wrought with confusing restrictions and regulations. Additionally, student loans entail forgiveness and other forms of relief, whereas retirement funds strictly correlate savings with funds, nothing more.
An easy solution to transfer one expense to savings is cutting off the cable bill. Many people reserve $100-$200 on cable alone, which adds up to $1,200-$2,400 a year that could directly impact a savings account instead. Low-cost on-demand services are available (most popularly Netflix or Hulu) to satisfy TV and movie watching cravings.
Bottom line: it’s sensible to compile your savings into a retirement account and research the abundance of support in the realm of paying for college, whether it means student loans, scholarships, student income or any of the other possible options. Paying for college includes flexibility; retirement savings don’t.
What are your thoughts on the issue? Let us know by commenting below or writing on our Facebook wall!
Westface College Planning can help navigate the financial aid process from start to finish. To learn how we can help you call us at 650-587-1559 or sign up for one of our Tackling the Runaway Costs of College Workshops or Webinars.
Photo Credit: TradingAcademy.com
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