Paying for college, without sacrificing your 'nest egg'
(BPT) - As high school seniors get ready to graduate, many of their families are preparing to send them off to college. Tasked with more than goodbye’s and packing, these families are working to balance important competing financial goals – from paying for their children’s college to saving for their retirement years. Having the right financial plan in place can help families prepare for rising tuition costs, without compromising their retirement “nest egg.”
One place mass affluent parents are less likely to look for funding their children’s college education is from their retirement savings. In fact, only 22 percent of mass affluent parents (those with $50,000 to $250,000 in investable assets) who saved or are saving for their children’s college education said they would be willing to cut back significantly on their retirement savings to pay for their children’s college, according to the latest Merrill Edge Report. As mass affluent parents continue to prioritize their retirement savings, many are instead relying on student loans (37 percent), scholarships/grants (36 percent), and state and/or federal financial aid (26 percent) to fund their children’s college education.
“Today, many mass affluent parents are in a unique financial situation – they are working to balance saving sufficiently for retirement, while also contributing to their children’s college education,” says Aron Levine, preferred banking and investments executive at Bank of America. “It can be an intimidating task, but parents should plan ahead to help make their retirement goals a reality as well as utilize other financial resources early on to help their children pursue their educational goals.”
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