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By Christine Benz and Adam Zoll | 10-15-2013 12:00 PM

How Much Can I Afford to Save, and How Far Will It Get Me?

Parents shouldn't compromise their own retirement plans to save for their children's college expenses, but they should establish guidelines with their children for how much they're prepared to spend.

Christine Benz: We're talking about saving for college today, and one thing that a lot of families have to wrestle with is this idea of making trade-offs. They're usually saving for their own retirements, at the same time they're attempting to invest and save for college. How do you begin to evaluate those trade-offs and find that right balance?

Adam Zoll: I think in a sense, this speaks to some of the emotional issues that we talk about when we talk about saving for college. We all want to do the best that we can for our children and provide the best education that we can for them. However, doing so at the expense of saving for retirement could be a real mistake.

If you’re not saving for retirement for a number of years, over the long haul, especially if you're in your sort of traditional college-savings years in your 30s and 40s, where your retirement is still maybe 20-30 years away from you, it may not be top-of-mind the way saving for college is.

However, by skimping on saving for retirement during those years, you could be doing yourself a real disservice and miss out on a lot more money when you do need it during your retirement. And of course, as we're fond of saying, your child can get loans to go to college, but no one is going to give you loans for your retirement.

Benz: And arguably an even worse phenomenon, one that I think a lot of families fall into, is that they end up raiding their retirement funds when those college bills come due. I'm assuming you don't think that's a great idea either?

Zoll: Right. I don't think it's a great idea. I recognize that in some cases that people don't have much choice. However, I think that if you really can't afford to repay yourself, which you're required to do when you take loans from things like your 401(k) account, then you really need to tread carefully. If you are in the position of having to borrow from your retirement fund, maybe you need to look at how much you're spending on the college education in the first place and ask yourself whether you're taking on more than you can afford.

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