Why College Expenses Are Ruining This Generation’s Retirement Savings?
My Dad’s generation use to work for one company their entire career, retire and collect a pension. It’s not the same now a days as people change employers and location on a regular basis. Not too many companies have a pension anymore either, most of them offer 401k plans instead. The good thing is you can contribute $18,500 and even an additional $6,000 if you’re over the age of 50 to a 401k. The bad thing is how much easier you can access this money and so many people do! One of the biggest reasons they deplete some of their retirement savings is for their children’s college expenses. I certainly understand this since my husband and I have two children who both graduated college. It’s brutal!
However, this bothers me on so many levels. First of all, I’m going to fuss about the colleges/universities. Why isn’t anyone pressuring them to reduce their costs?!!! When the price of gas goes up, people complain about the oil companies gouging everyone while making a huge profit. What do you think has been happening in higher education? These schools have had an alarming amount of growth in administrators making six and even seven figure incomes – on the backs of our kids! Secondly, the government issues about 90% of college loan business every year and now has a whopping $1.3 trillion portfolio of student loan debt using taxpayer money. What motivation do the colleges have to reduce their tuition? No matter how high the tuition, don’t worry the government will give you a loan. Finally, why is a bachelor degree four years? Why did they make my son, who got an A in high school AP Physics, retake Physics in college? He got an A in that class too but it cost us thousands for him to retake it. They could be doing so much more to help out our kids and families. I could go on and on about how we’re not getting any help from these “businesses”.
Parents, are you really raiding your 401k to make sure your child has a “college experience”? Try everything you can to reduce the cost of college while making sure your child gets a good education. Is it really worth reducing your retirement funds and taking out loans so your child can go to a Frat party every weekend on campus versus staying at home and going to the local branch for the first couple of years? Think very hard about the consequences of sending your child to an out of state school for an education or anthropology degree. I wholeheartedly believe in higher education but the return on investment for some of these majors doesn’t warrant the price tag by any means! Staying at home, at least for the first couple of years, and working your way through college teaches some pretty good lessons too. With the price tag of some of these schools, you could very well raid your retirement nest egg while your child still ends up with a pretty hefty amount of debt. That’s a bad scenario for everyone!
Enjoying college and retirement are both very important. Let’s not ruin it for both parties! No one wants to see a recent college graduate saddled with so much debt that they can’t even rent an apartment, buy a car, or save any money for a future house. And who wants to see someone miserably working way past their targeted retirement age because they couldn’t save enough. The Wall Street Journal featured a great article siting several other reasons that this generation isn’t prepared for retirement. It’s never too late to change your direction. Think of what a fun party an early retirement or debt free college graduation would be!!!