In the struggle to save for retirement and pay for college too, financial professionals often find themselves pushing back against a parent’s natural instinct to provide for their children. That’s one of many findings from the Advisys survey, “College Funding vs Retirement.”
One indicator of the enormity of the challenge is the shocking number of senior citizens who are carrying their children’s college debt into retirement. According to the Consumer Financial Protection Bureau, the number of people age 60 and older with outstanding student loans quadrupled from 700,000 in 2005 to 2.8 million in 2015.
With soaring college costs and stagnant wage increases, how are financial professionals on the front line of this conflict advising their clients? What insights and solutions can they offer?
With surprising consensus they say parents must focus on retirement first. They must resist temptations to drawn on existing retirement savings to cover college costs, looking instead to other alternatives: loans, less expensive schools, or encouraging others to help cover costs.
The best approach is to avoid the conflict altogether. Start saving for college as early as possible using tax advantaged savings plans or cash value life insurance.
The survey was emailed to a randomly selected list of more than 8,000 financial professionals representing a mix of Independent Insurance Agents, Independent Agents of Broker Dealers, and Registered Investment Advisers.