[Note: Tough times call for us all to get stronger. Today I’m starting to talk about economic survival on this blog and on my website. Everyone I know, myself included, is being affected by this economic downslide. I’m offering some thoughts about how to survive and thrive in these tough times. I invite your comments and ideas. –Kathleen]
Sure, you love your kids. I love my kids, too. Sure, you want the best in life for them. We all do. Sure, you want them to have a good education that will give them an opportunity for financial security.
Maybe you’ve even funded 529 plans for them that will give them a big boost
When it comes time to cough up those tens of thousands of dollars it will cost to get a college education.
So it may sound selfish when I tell you not to use your retirement money (this includes home equity) to pay for your kids’ college educations.
Here is the simple and practical reason why: A college education can be funded by loans. There are no loans to cover your retirement.
Yes, it’s tough to graduate from college with a debt burden. But let’s hope your kid has learned something in college and is smart enough to parley that knowledge into a decent income. He’s got his whole working life to pay back the loan. She can be creative and take a public service job that will help write off the loan the longer she stays in the job.
You, on the other hand, have worked your lifetime for your 401(k) and your home. If you’re like most of us, the vagaries of poor economic policy that had nothing to do with you have now robbed you of a large percentage of the value of your portfolio and trashed the value of your home.
I don’t want to sound like Gloom and Doom Panic Monger Suze Orman here, but it’s going to be really hard to regain that lost value unless you have 30 years or so until you plan to retire.
Our leaders simply don’t have experience with this, but the experts tell us that it took the average person 25 years to recover from losses during the Great Depression.
A little personal info: I’m 60 years old. I’d planned to retiree at 70. My husband is 67 and he planned to retire in three years. Now, for both of us, those goals are so far out of sight they’re over the horizon.
Of course, none of us know how long we’ll live. That means we don’t know how many years of retirement we’ll have to fund.
My father, at 86, lives in true terror that he will outlive his money, which has literally been decimated by market downturns in 2001 and this past crisis. We’re not in much of a position to help.
I’ll be talking about this much more as we explore ways to survive in this bleak economic environment, but for now, take this home:
Tell your kids now they’ll be on their own to find financing for their college educations.
Fund your retirement, not your kids’ college educations.
