Thoughts? Retirement vs Education
Find a Conversation
| Thu, 12-10-2009 - 3:35pm |
I was just wondering what everyone's thoughts were on which order to save for these very large expenses in our lives.
A lot of us here have little or no savings(except Duke lol). But as we pay off debt and get a taste for savings starting with our baby efund you start to get a in the saving habit. My oldest DS is 12 soon to be 13 and my youngest is DS is 9 soon to be 10. I need to save a certain amount of money for each child as per my agreement with my Ex for them for secondary education. I am more than happy to do this. I do feel conflicted though, because I own my own business and do not have a retirement contribution set up. I will have an asset I will sell at some point but I would like to do more. I also need a newer vehicle soon. I do realize though, if I don't start saving, even if I keep changing my mind on what the total is for, I will not accomplish anything. So off saving I go.
I guess everyone is in a different situation as to when you start and what order you do things in. I was just wondering if there are values related to the goals and when other people seem to start saving for these big ticket items?



Pages
I know Suze Orman says Retirement because you can't take out a loan for that....technically anyway.
Kids can get grants, student loans, scholarships, etc... for education but there is nothing like that for retirement.
Becky
CL of 4th, 5th & 6th grade Scoliosis
For me retirement got the bulk of my attention this year.
When I went to school, I did come out with $20 000 in debt. It was a hard way to start, and it took me a while to get it paid off. But, I certainly don't begrudge my parents for not funding more of my education. I think I learned skills to deal with money and debt than if I had not had to do this.
I would first ask what is the agreement with the ex? How much do you have to save? Is it a dollar amount, a percentage? Is it in your divorce agreement or verbal? Also, is it just tuition or all expenses (big difference).
I would say save enough to meet your legal obilgations. Use the RESP rebate the government is offering if your ex isn't (they give you something like $400 a year if you contribute so much? I can't remember the details) and then focus on retirement. You can borrow for your kids education but you can't borrow retirement!
Don't be scared of loans for school. My parents took money that was for school during their divorce (long story, it was money left for me by my grandma and money I had saved). I took out loans and my dad is paying those back for me. Its probably working to my benefit because the interest on those loans is a tax deduction for me.
I've said it before and I'll say it again. The best gift you can give your kids is a parent who is financially secure!!! You don't want your kids worrying about you in old age. Its not a good feeling!
Bex -
"Yesterday is history, tomorrow is a mystery, today is a gift -thats why its called the present."
Bex -
Ditto what Bex said!
As an aside, I started an RESP for my daughter when she was born.
Kate
It is a verbal agreement between me and my Ex. But I WANT to save something for each(2 kids). We agreed to save 10 grand for each kid each. So they will get 20 grand to go to school each. It will not cover the whole thing I know that. I don't even know if they will go to school. So I am shying away from RESPs. I think I will save 9 grand for each kid and invest it, I am looking at GICs. I know there is no tax benefit but I want the money to be there for what they need, whether it be education or a house down payment etc.
My credit line increase came through today! I will take the money I have been saving saving saving and take care of one kid at the end of December. That just leaves on kid left. Then its back to being about me!!
I am buying my first RRSP for myself just before February with my visa points. It will be small but it is a start. Plus my BF and I own land and rent it out, so once the land is paid for the rent will be income and that is part of my retirement plan. I will continue to add to the Rrsps going forward. Plus I have equity in my store that is building. I will sell it one day and that will go towards retirement as well.
Thank you for all your input!!
Every financial book I have read and now my own experience with college funding says prioritize your retirement over your kids' education.
Why - if your accounts show college funds for the kids, they will count on that money 100% to go to college.
If I can make a suggestion here, I would say go with the RESP. The government will give you up to $200 for the first $500 you put in (depending on income). Worst case scenario you get $100 on the first $500.
Bex -
and if your kids decide not to go to school you still get to remove the money that you put in and the interest the only money you have to return is any grant monies that you received. Also if you have an RESP other family members may want to put small amounts in for birthdays and other holidays. (I know my daughter put $ in my granddaughters RESP for her birthday and christmas)
Just a thought.
Sharon
Hi guys,
I just wanted to say thank you again for all your advice. I will look into the RESP again. Sometimes I get lazy and just want it all "done" without looking at all the best options. Free money does sound good so I should look at the max contributions to it and do that every year. It will take less of my money and I can use that for my other goals.
I really do appreciate all your advice ladies!
Pages