(BPT) - Saving for the future is a top financial priority for most people. If you have children, then saving for their college education may also be an important goal for you. Or, you may want to pursue an advanced degree yourself.
Putting away money to afford both retirement and higher education can be quite expensive. Many families face the challenge of balancing retirement and college savings.
Fortunately, you don't have to make a choice between them. There are several smart strategies that can help you strike the right balance.
Start saving money early. The earlier you begin saving for both retirement and college, the easier it will feel to reach your goals.
Set clear savings priorities. Determine how much you can comfortably save for each goal. Your retirement generally should take precedence over savings for education expenses. Remember: Loans are available for college but not for retirement.
Make use of tax-advantaged accounts. Maximize contributions to qualified retirement accounts such as 401(k)s and IRAs. For education expenses, consider 529 plans or other college savings accounts, which can offer tax benefits in some states.
Automate regular savings deposits. Set up automatic contributions to both retirement and college savings accounts. You could set up direct deposits or 401(k)/TSP contributions from your paycheck, or automatic account transfers, to make the process of saving easy and painless. This ensures consistency and discipline in your savings strategy.
Adjust your contributions over time. As your financial situation evolves, revisit your savings plans. You might decide to change how much money you're setting aside. Windfalls, pay raises or savings from reducing expenses can be opportunities to save more money toward your goals.
Involve others in education savings. Teach your children about the value of money by involving them in the college savings process. Encourage them to contribute a percentage of their part-time earnings or gift money to their accounts. This can help them appreciate what it takes to go to college. Additionally, let family members know you've set up a 529 plan and encourage them to contribute to it.
Explore financial assistance options. Look into scholarship opportunities, grants and financial aid options to reduce college costs. On the retirement side, see if your employer offers a matching contribution for qualified retirement accounts. An employer match can give a significant boost to your retirement savings.
By carefully planning, setting priorities and using tax-advantaged savings accounts, you can set aside money for your retirement and college education goals. And be sure to check out how Navy Federal Credit Union can help, with options to save for retirement and college.
Navy Federal is federally insured by NCUA.
