Setting SMART Financial Goals for Families Saving for College and Retirement
SMART financial goals = stress-free college planning AND retirement savings. Learn how to create clear, actionable goals for your family.
Hello Discerning Parents and Future Graduates,
Today, we’re tackling a big one—goal setting. But not just any goals. We’re talking about SMART financial goals: Specific, Measurable, Achievable, Relevant, and Time-bound. It’s time to stop wishing and start planning so you can save for college and retirement without the stress.
Why SMART Goals Matter
Dreams like “saving for college” or “retiring early” are great, but they’re not actionable on their own. SMART goals turn those dreams into achievable milestones. Think of it like using GPS: Instead of saying, “I want to go somewhere warm,” you’re plugging in “123 Beach Avenue, Miami.”
The Anatomy of SMART Financial Goals
Let’s break it down:
Specific: Know exactly what you’re saving for.
Example: “Save $50,000 for college by 2035” vs. “Save for college.”
Measurable: Track your progress.
Example: “Save $5,000 per year for college” vs. “Put some money aside.”
Achievable: Be realistic about what you can afford.
Example: “Save $200/month” based on your budget vs. “Save $1,000/month” when that’s not feasible.
Relevant: Align with your values and priorities.
Example: Focus on education and retirement, not a vacation home.
Time-bound: Set a deadline to keep you motivated.
Example: “Max out my IRA by December 31.”
Setting SMART Goals for College Savings
1. Start with the Big Picture:
Research the projected cost of college using tools like College Board’s Net Price Calculator.
Don’t forget to account for inflation (historically 5-6% for college costs).
2. Break It Down:
Specific: “Save $40,000 for tuition at a state university.”
Measurable: “Contribute $300/month into a 529 plan.”
Achievable: “Use Monarch Money to analyze cash flow and adjust.”
Relevant: Your child’s education is a family priority.
Time-bound: “Reach $40,000 by August 2033, the year my child starts college.”
Setting SMART Goals for Retirement
1. Calculate Your Needs:
Use a retirement calculator like Fidelity’s Retirement Planner.
Consider your desired lifestyle, medical costs, and travel plans.
2. Set a Clear Savings Goal:
Specific: “Save $1.5 million for retirement.”
Measurable: “Contribute 15% of my salary to my 401(k).”
Achievable: Adjust discretionary spending to prioritize contributions.
Relevant: Ensures you don’t outlive your savings.
Time-bound: “Max out 401(k) contributions by December each year.”
Balancing College and Retirement Goals
1. Prioritize Retirement:
Remember, there are no scholarships for retirement.
Contribute at least enough to your 401(k) to get the full employer match before focusing on college savings.
2. Leverage Tax-Advantaged Accounts:
Use a 529 plan for college to grow funds tax-free.
Max out retirement accounts like IRAs and 401(k)s for the same reason.
3. Get Creative:
Encourage your child to apply for scholarships, explore dual enrollment, or consider a two-year community college before transferring.
Monitoring and Adjusting Your Goals
1. Regular Check-Ins:
Schedule a “financial check-up” every six months using Monarch Money or similar tools.
Track progress toward both college and retirement savings.
2. Adjust for Life Changes:
A promotion, new child, or market shifts may require recalibrating your goals.
3. Celebrate Milestones:
Reaching a goal (or even a halfway point) deserves recognition. Treat yourself to a small family celebration—it’s progress worth noting!
Saving for college and retirement doesn’t have to feel like choosing between two impossible options. SMART goals make the process clear, actionable, and achievable. Start small, stay consistent, and watch as those goals turn into reality.
Need help setting SMART financial goals? Schedule a Getting Acquainted Call today, and let’s create a personalized plan to secure your family’s financial future.
Warm regards,
Julie Bray
Your Family's College and Retirement Champion
GW Financial, Inc.
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.