If you're like many Americans, you put off marrying and having children until you were well established in your career and owned your own home. In fact, the average age of first-time childbirth rose by about 5 years from 1970 to 2013. While having a few extra years under your belt can provide you with a significant amount of financial stability early in your child's life, you could find yourself facing involuntary downsizing or even wishing to retire right around the time your child heads off for college. Can you afford to fund a college education during the years your retirement savings matter most? Read on to learn more about achieving multiple financial goals with limited assets.
Is it a good idea for you to retire while your child is in college?
While taking on an intimidating expense like college tuition at the same time you've dramatically reduced your wage income can seem like a recipe for disaster, in some cases, retiring just before your child's college expenses begin can actually benefit you both. If your child is applying for any grants or scholarships that depend on federal aid, he or she will need to fill out the Free Application For Federal Student Aid (FAFSA). The amount of need-based aid available to your child will largely depend upon your household income. High earners whose children might have been exempted from most aid could find that doors open much more quickly on a smaller retirement income.
You may want to run a few potential scenarios through a FAFSA application to determine whether retiring now or waiting until college is finished is the wiser financial choice.
What else can you do to make college more affordable when retirement is coming up?
Many parents have found it worthwhile to enter into an agreement with a college-aged child providing that the child will take out student loans to fund college and the parents will pay off these loans after the successful completion of a degree. This allows the parents to spend an extra 4 (or even 5 years) saving tuition funds while also ensuring that the child has an added incentive to excel in his or her classes.
If you see retirement approaching on the horizon but are also concerned about giving your child a positive start by graduating college free from debt, you may want to visit a certified financial planner to help work out specific scenarios that can provide you with peace of mind. For more information, visit http://globalwealthconsultants.com or a similar website.