BOSTON (CBS) – Babies grow up and that baby we talked about yesterday just had her 17th birthday and will be a senior in high school this fall and has two younger brothers. What happened to all of the planning you were going to do?
You and your spouse are both working and try to be around for the kids as much as possible. Life has kept you so busy you’ve had no time to think about the goals you made 17 years ago when your first child was born. Your goals are different now with kids that can drive.
Most common goals:
- Pay for college
- Emergency fund
- Get out credit card debt
- A comfortable retirement
College should not come as a surprise for the parents of teenagers but it often does. They have been so busy raising the kids and getting through the day to day stuff that the future seemed so far away. With the oldest wanting to take college tours this summer it is time to have a college chat with all of the kids.
Figure out what you can afford to pay for college. How much do you borrow? If you have nothing saved, college will have to be paid for with loans and current income. And you want to treat all of the kids equally so be sure you don’t shoot the wad on the older kid and have nothing left for the last child.
Continue to contribute to your retirement plan. Retirement accounts do not become an asset that colleges expect you to tap into to help pay for college. Although many retirement plans do allow you to borrow for college and if you have IRAs you can actually use them to help pay for college.
I would not recommend using the IRAs because unlike borrowing from the 401(k) you can never repay the money to the IRA. You will owe taxes on your IRA withdrawals but no penalty if used for college before age 59½. College expenses could be for your child or grandchild or even you or your spouse.