5 Myths About Saving for Both College and Retirement

Balancing college savings and retirement isn’t about perfection—it’s about making thoughtful decisions that align with your family’s goals.

Hello Discerning Parents and Future Graduates,

Today, we tackle some of the most persistent myths about saving for college and retirement. These misconceptions often lead families astray, creating unnecessary stress. Let’s bust these myths wide open, so you can take charge of your financial journey and find balance without sacrificing either goal.

Myth 1: You Must Choose Between Saving for College and Retirement.

False! While it may feel like an either-or scenario, saving for both is possible with strategic planning. By leveraging tools like 529 plans for education and maximizing employer retirement contributions, you can create a balanced approach to address both goals. A Certified Financial Planner™ professional can help map this out.

Myth 2: Saving in a 529 Plan Limits Flexibility.

Not true. A 529 plan offers tax-advantaged savings for education and can be transferred between beneficiaries, meaning if one child decides not to attend college, the funds can be used for another family member​. Moreover, recent changes allow some funds to be applied to apprenticeships and up to $10,000 in student loan repayments.

Myth 3: You Should Prioritize College Savings Over Retirement.

As much as you want to support your children, your retirement comes first. Scholarships, loans, and work-study programs exist for college, but no one offers loans for retirement. Ensuring your financial independence safeguards your family’s long-term security.

Myth 4: Financial Aid Penalizes Savers.

This common concern is overblown. While savings are considered in the Expected Family Contribution (EFC), strategies such as keeping assets in retirement accounts (which aren’t counted in financial aid calculations) can mitigate the impact

Myth 5: You Need to Fully Fund College Before Retirement.

Reality check: It’s okay to let your child share the responsibility for college costs. Encouraging them to apply for scholarships, work part-time, or take on manageable student loans can teach valuable lessons about responsibility and financial planning.

Actionable Tip:

Consider creating a family budget that prioritizes saving for both goals, leveraging the power of compounding for retirement while consistently contributing to a 529 plan.

Balancing college savings and retirement isn’t about perfection—it’s about making thoughtful decisions that align with your family’s goals. The best strategy is one that fits your unique circumstances while keeping both milestones on track.

Ready to find your financial balance? Schedule a Getting Acquainted Call. Together, we’ll tailor a strategy that sets you and your family up for success

The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by GW Financial, Inc. to provide information on a topic that may be of interest. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright 2024 GW Financial, Inc.