Here's a financial challenge many parents will find themselves in at some point... how to pay for their children's college tuition. A new study shows that many intend to dip into their own retirement accounts to do it.
Nearly a quarter of the nation's parents who are saving for their children's college education plan to use some of the money in their 401ks, IRAs and pension plans, according to a new study from Sallie Mae and Gallup.
Your intentions may be good, but financial advisors say raiding your retirement account is risky. Steve Ellis, with Seasons Financial Group in Tulsa, says it may delay your retirement date, and when you do retire, you might run out of money sooner. So what can parents do? Ellis advises to:
- Get with a good financial planner to crunch the numbers.
- Evaluate other options to pay for college.
- It may be better for a parent to take on an extra job than dip into their retirement fund.
Other alternatives? Just half of the parents polled said they were familiar with 529 college savings plans, which are available in every state.
And how about this one? Maybe the student can help out by getting a part-time job. Just a thought.
Here's more on the results of the College/Retirement survey.
