Late Start

Richard Quinn

I WAS 45 YEARS OLD in 1988. That year, my oldest child started college and, the next year, my second son. Two years later, it was my daughter’s turn. The year after, my youngest went off to college. I had at least one child in college for 10 years in a row.

I bet you think this is a story of college loans and other debt. Nope, it’s about retirement planning. After going into major debt and using all my assets, other than my 401(k), I had several years to recover. Fortunately, I was also eligible for a pension—and I eventually retired at age 67.

In 2018, things are very different. Today, all my children have kids in elementary school—at an age when my children were going off to college. My oldest son, now age 48, will be nearly 60 when his oldest child starts college. The second son, age 47, will be 63 when his youngest graduates high school. The situation is similar for my other children and, it seems, for many in their generation.

See where I’m going with this? Saving for both retirement and college has always been a challenge. But there used to be a gap between the end of one and the start of the next. That gap is disappearing.

The age at which women have their first child has been rising for decades. In 2016, the Center for Disease Control reported that, for the first time, women in their early 30s were having more children than those in their late 20s.

None of my children has a pension. My advice to them is save for retirement first. To help with college costs, my wife and I contribute to our grandchildren’s 529 plans in lieu of birthday and other gifts.

In my view, the long-term solution to college costs is rethinking the entire post-secondary education process, including the number of years spent in college and better defining which jobs truly require a four-year bachelor’s degree. But until that happens, most Americans have no easy funding solution. Still, here are nine tips:

  • Start saving early for college, even if it’s only small amounts.
  • Spend less on birthday and holiday gifts, and divert more to an education fund. Ask relatives to do the same.
  • Explore funding opportunities such as 529 plans, Coverdell education savings accounts and even Roth IRAs.
  • Consider the pros and cons of putting college savings in your 401(k) or IRA if you will be age 59½ or older when the funds are needed. Retirement accounts are a mixed bag when it comes to financial aid: They may not count as assets in the aid formulas, but withdrawals will count as income.
  • As your child gets closer to college age, research the best loans and investigate opportunities for grants.
  • Consider starting with two years at a community college, and perhaps earning an associate degree, and then transferring to a better-known institution from which your child will then earn his or her bachelor’s.
  • Consider the educational assistance programs offered by the Department of Veterans Affairs.
  • Instead of shooting for the best big-name private college and the debt that may come with it, try to match your child’s goals with the best affordable school. If the teenager’s goals are poorly defined, as they likely will be, a decent state school may do the job.
  • Most of all, don’t sacrifice saving for your own retirement. There are no good alternatives to getting old.

Richard Quinn blogs at Before retiring in 2010, Dick was a compensation and benefits executive. His previous articles include Ten CommandmentsRunning on EmptyTaking Your Lumps and Pain Postponed. Follow Dick on Twitter @QuinnsComments.

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David Powell
David Powell
4 years ago

The advice to ignore college marketing and get an associates degree at a community college is doubly smart. For many students, it’s a chance to make cheap mistakes at an age when a lot of life lessons happen. And in the end your diploma has the name of the school granting your B.A. or B.S. degree.

4 years ago

My wife’s and my estate planning gives most of our assets to our grandkids with the sole purpose of starting / enlarging their retirement accounts. Our children should be almost at retirement age when we die. It is too late to help them. There are ways to fund college such as joining the military. Starting off in a community college helps keep cost low. The one thing I didn’t see on your list was to have affordable and reasonable weddings. Spending $20k, $30k, $50k on weddings is insane unless you have that money after you fund your retirement and are proper paying down your other debt. Don’t go into debt to fund your kids dreams or kids and grandkids college. You should retire not work yourself to death.

4 years ago

Good article. Food for thought though: for late-starting parents, they may already have a good start on retirement by the time they have kids late in life. That’s what ended up happening to me and my wife. Now that we’re further on in our careers, saving for both retirement and college is not a problem (thank God).

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