Javascript is not enabled.

Javascript must be enabled to use this site. Please enable Javascript in your browser and try again.

Skip to content
Content starts here
Leaving Website

You are now leaving and going to a website that is not operated by AARP. A different privacy policy and terms of service will apply.

Should You Save for Retirement Rather Than Fund Kids’ College?

4 reasons why you might want to put yourself first

spinner image A hand drops a coin into a money jar that sits next to a stack of books with a graduation cap.

You’ve worked hard throughout your career. Now, in your 50s or 60s, retirement is coming into view. You know you should maximize your IRA or 401(k) contributions. Or perhaps you’re already retired and coming to appreciate the importance of making your nest egg last

But now your children or grandchildren are touring colleges and sending out applications. You desperately want to help them start their adult lives financially strong, without the burden of massive student loans. 

spinner image Image Alt Attribute

AARP Membership— $12 for your first year when you sign up for Automatic Renewal

Get instant access to members-only products and hundreds of discounts, a free second membership, and a subscription to AARP the Magazine.

Join Now

And maybe you’re starting to wonder — or perhaps you’ve been asked — if you should cut back on saving for retirement or even dip into IRA or 401(k) funds to pay their college bills.

You’re far from alone. Two-thirds of parents of adult children polled for a March 2023 Bankrate survey reported making financial sacrifices for their kids ages 18 and up. About half reported dipping into retirement or emergency savings, one in five significantly so.

The heart wants to help. According to a July 2023 survey by personal finance website WalletHub, 72 percent of U.S. parents say their children’s education is worth going into debt for.

But if it’s a choice between going into debt to pay for your kids’ school and safeguarding your retirement security, consult your head as well. The stakes are high, and the consequences can be lasting.

“Whether it’s your children or grandchildren, take care of yourself first,” advises Roger Whitney, a certified financial planner (CFP) and host of The Retirement Answer Man podcast.  “If you don’t do that, you’re just going to wind up being a burden to them later.”

Here are four things to think about in weighing whether to reduce or forgo saving to cover kids’ college costs.

1. You have less time to recoup the costs

Your college-age children or grandkids have their entire working lives in front of them and decades to earn, and save, before they retire. Your window for both generating income and saving money is getting smaller, if it hasn’t already closed.

That’s a big reason why financial advisers recommend saving toward retirement — optimally, 10 to 15 percent of your pretax earnings — before funding anything else and not putting yourself in the red with college costs.

“Retirement savings are intended to provide a comfortable life in the latter stages when income generation can be challenging due to age, health issues or the changing job market,” says Leo Chubinishvili, a CFP with Access Wealth in East Hanover, New Jersey. 

Shopping & Groceries

Coupons for Local Stores

Save on clothing, gifts, beauty and other everyday shopping needs

See more Shopping & Groceries offers >

Without adequate savings, older adults risk facing financial insecurity when they are least capable of addressing it, he says.

2. They have other options to pay for school

There are ways to fund higher education that don’t exist for retirement, starting with an expansive federal loan program and student financial aid, and numerous other avenues to reduce or defray college costs. 

For example, your kids could choose to go somewhere that costs less — an in-state university over out-of-state campuses, or public schools over private ones. They can do their first two years of undergraduate study at a much cheaper community college. 

They can work part-time, perhaps in a federal work-study program, earning money to help pay for school and putting some skin in the game. If they’re studying at a local college, they can live at home and save on room and board. They can apply for grants and scholarships. If they serve in the military, they can obtain college funding through the GI Bill or another service program. 

Sure, there are ways to lower your living costs in retirement, such as moving to a cheaper city or state. But you won’t be able to apply for a grant to do it. Before writing that tuition check, have candid conversations with the kids or grandkids about the long-term financial impact for you and the levers they might use to creatively fund college. 

3. Student debt can be managed; retirement debt can’t

No parent wants to burden their kids with a lifetime of debt. But college loans, if used judiciously, do provide a structured way for students to pay off educational costs, and numerous paths to debt relief or forgiveness for borrowers who have lower incomes or go into public service, working for a government or nonprofit. 

spinner image membership-card-w-shadow-192x134


Get instant access to members-only products and hundreds of discounts, a free second membership, and a subscription to AARP the Magazine.

For example, the U.S. Department of Education recently expanded income-driven repayment options for federal student loan borrowers with lower earnings. The new SAVE (Saving on a Valuable Education) plan reduces qualifying borrowers’ monthly payments (from 10 percent of discretionary income to 5 percent) and will forgive remaining balances for some borrowers after as few as 10 years of repayments, compared with the standard of 20 to 25 years.

By contrast, if making college payments leads you to have a cash crunch later, you could end up with hefty credit card bills or personal debt in retirement as you try to make ends meet. Banks and lenders won’t be nearly as forgiving or flexible with you if you’re deep in debt. 

People ages 50 to 64 have average credit card balances of $7,200, and individuals 65 and older owe an average of $4,700, per data from the credit bureau TransUnion. With credit card interest rates averaging about 21 percent, any credit card debt you amass can quickly snowball.

4. You could leave your future self financially vulnerable

Slowing your saving or parting with money you’ve put away could lead to hardships in later life. Is paying exorbitant tuition now worth risking poverty or financial instability in your golden years?

“I’ve seen a lot of people committing slow financial suicide to make everybody else happy,” Whitney says. Before you send that tuition payment, have a financial adviser run some income and expense numbers for you. Otherwise, he says, “you’re just guessing” about the long-term impact of college costs. 

For example, significantly cutting into your present or future savings could leave you more reliant on Social Security. That can be a dicey proposition. The average retired household has roughly $4,000 per month in expenses, according to the financial services firm TIAA — more than double the average Social Security retirement benefit ($1,840 a month in August 2023).

Even if you feel like you’re leaving yourself enough to cover basic living costs, keep in mind that health care expenses typically increase as we age. The average 65-year-old couple in 2023 will need $315,000 saved to cover health care in retirement, according to Fidelity, and nearly 70 percent of people 65 and up will need long-term care at some point, according to federal data.

“Having robust retirement savings can help mitigate the financial strain caused by unforeseen medical emergencies or long-term care needs,” Chubinishvili says.

Discover AARP Members Only Access

Join AARP to Continue

Already a Member?