Adulting is hard enough as it is, but when it comes to prioritizing your retirement savings or your child’s college fund, you may feel like you’re between a rock and a hard place. First thing’s first: like making sure you put on that oxygen mask before helping the person next to you, start contributing to your company’s 401k. If you started in your 20s, the early savings will help you stay head of the curve.
Next, open a 529 college savings plan as soon as your child[ren] is born, and let your family know about it – it’s a great gift idea for the grandparents and extended family.
Set a goal to save at least one-third to one-half of junior’s expected college costs and periodically monitor your progression towards your goal. By the time you’re in your mid-40s, you’ll have benefited from the compounding interest during two decades’ worth of savings and investing. Also, you likely will have a clearer picture of what college your child is planning to attend and what scholarships and/or financial aid is available. At that point, you can catch up on any shortfalls.
Once you’ve reached your college funding goal, you may have 10 to 15 years until retirement, so now is the time to shift your focus back to retirement savings. Putting a strategy that balances retirement savings and college funding in place now can help you avoid delaying retirement because you’re still catching up on your savings. Feel better now that you have a plan?
Editor's Note: This blog post is part of the July 2017 edition of Odyssey NexGen Newsletter. Curious about Odyssey's NexGen program? Email [email protected] to learn more.
Reviewed & approved via C2C by BT 7/11/17