Kids going to college is exciting. It’s also expensive. And while most parents want to help their children graduate with little or no debt, you won’t want to jeopardize your retirement (and have them pick up the bill).

Balancing the desire to support your children with the need to protect your own financial security is tough. Here are some ways to deal with this particular “What if Monster.”

Financial and Emotional Pressure

The average student finishes their bachelor’s degree owing $29,560. Student loans can’t be discharged during bankruptcy either, and often have high interest rates. These loans interfere with people’s ability to save for retirement, buy a home, etc.

This places a lot of pressure on parents to help as much as they can (and, increasingly, parents are still paying off some part of their own student debt). Add in the emotional need to do right by your children, and it’s no surprise that too many parents sacrifice too much for their children.

College and Retirement – Not Separate Issues

First, it may seem selfish, but you should put your own retirement needs first. Helping your children pay their way through college is great, but if they then end up with the financial burden of supporting you, it can cause even more problems than outstanding debt. Your financial futureisyour family’s.

Which brings us to our next point. College and retirement are part of overall family wealth planning, not separate goals. Both are important, and the best strategy is one that supports both as much as possible. A financial advisor can help you determine the best course of action and set a budget for higher education that is reasonable. They can also model how college costs affect your retirement timeline. How much later are you willing to retire to help your children?

Mitigating College Costs

This doesn’t mean asking your children to give up on their dreams. But you should also have realistic conversations. This might mean talking about a school in-state rather than out of state, doing the first year in community college, or choosing a smaller school. Some kids can “sweep the gym floor,” but this is not an option for most.

Here are some other things you can investigate:

529 plans

These take two forms. One is a prepaid tuition plan, which allows you to lock in this year’s tuition at a specific school. This only works if your child already knows what they want to do. The more flexible option is a college savings plan, which provides tax-deferred growth and tax-free withdrawals for education expenses. You control the plan and how your child uses it.

Scholarships and grants

Have your student apply for every scholarship they are eligible for, even if they seem to be a long shot. Even a small scholarship can help a lot.

Financial aid

Even wealthy families are eligible forsome financial aid. You also need to fill out financial aid paperwork, in most cases, to apply for scholarships and grants.

Student contributions

If your child has a job, encourage them to set something aside for college. This also builds good savings habits.

Look into studying abroad

Sometimes you can get a very prestigious education for less than the equivalent in the U.S., and if your child is interested in other cultures or becoming highly fluent in a foreign language, study abroad can be useful.

Ask other family members for help

Don’t be too proud to take money from grandparents or childless relatives. You can also get a loan from a family member at much better terms than commercial student loans.

Encourage Smart Spending

You can also encourage your child to save money by buying second-hand textbooks (textbooks can add up fast) and reducing trips home. And of course, working on their grades so they are eligible for scholarships.

What If It’s Too Late?

Yes, the best time to start saving for your child’s higher education is before you bring your baby home from the hospital. However, it’s never too late. You can continue to contribute to 529 plans all the way until graduation. Having less savings also makes it easier for your child to get financial aid.

You can still help and remember that even a few thousand dollars less debt can make a huge difference. Just don’t wreck your retirement to do it.

Thinking About Your Kid’s College and Your Retirement

Ultimately, a financial advisor can help. We can model different scenarios so you understand the tradeoffs and get a better idea of how much money you can give your child and how much they may need to borrow. All family circumstances are different, and you are not a bad parent if you aren’t able to contribute much to your child’s training.

If you have a child considering higher education or a younger child who might want to someday, contact us at CrossleyShear. We can help you slay the “What if Monster” and help your child with college without risking your own golden years.

Every investor’s situation is unique, and you should consider your investment goals, risk tolerance and time horizon before making any investment. Prior to making an investment decision, please consult with your financial advisor about your individual situation. The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee that it is accurate or complete, it is not a statement of all available data necessary for making an investment decision, and it does not constitute a recommendation. Any opinions are those of Dale Crossley and Evan Shear and not necessarily those of Raymond James.

Please note, changes in tax laws may occur at any time and could have a substantial impact upon each person’s situation. While we are familiar with the tax provisions of the issues presented herein, as Financial Advisors of RJFS, we are not qualified to render advice on tax or legal matters. You should discuss tax or legal matters with the appropriate professional.

An inevitable part of life is one’s parents growing old. 63 million Americans are family caregivers, and the number continues to grow. The majority are caring for adults, and some are “sandwiched,” simultaneously trying to care for elderly parents and young children.

Becoming a caregiver can negatively impact your finances as well as your mental and even physical health. It is often hard to find the support you need. If you’re facing this particular “What If” Monster, you may have visions of it taking over your entire life.

The Impact of Caregiving

As people live longer, informal and unpaid family caregiving has become an important part of healthcare. Family caregivers are often hit at multiple levels. Caregiving increases your risk of both depression and physical health problems, but many carers report that they are not strained and have fewer problems. Older caregivers, such as spouses, see a higher risk of unintentional injuries and may neglect their own health. If your “healthy” parent is taking care of your sick one, make sure they get help. Caring for someone with dementia is often one of the most challenging caregiving situations.

Financially, though, caregiving can hit individuals and families hard. Most caregivers experience financial strain. Many are forced into a horrible choice: Give up working and be broke, or hire professional help and be broke. Families also often have to cover nursing home costs, housing costs, home modifications, and clothing.

For families with more money, it would seem to be easier, but it can still have an economic impact. There are still lost hours of work and lost chances at promotion, being the highest risks. This can, in turn, impact your retirement savings and personal financial goals. Many carers need more time off or accommodations, such as coming in late or leaving early.

Planning for Expenses: A Blow to the “What If” Monster

Start planning for expenses early. In fact, you should have some idea what caring for your parents will cost before they start to develop health problems. For example, the cost of a home health aide, while varying significantly, averages to about $35 an hour. 24/7 coverage costs significantly more, and hiring a nurse is also expensive. Meanwhile, a nursing home can cost as much as $4,500 a month, more if you are looking at a more luxurious facility.

Assuming the worst allows you to set aside the money…and then if it is not needed, it can be redirected to other family expenses or your own retirement.

Full-time home carers also spend thousands a year on things such as food, clothing, medical care, and extra gas. There’s also a potential opportunity cost. For example, if your parent lives in a small apartment or guest house on your property, you may no longer be able to use that space as a rental. Talk to your parents about long-term care insurance, and speak with your wealth advisor about setting aside funds and preparing a financial strategy.

Build a support system right away. If you have siblings, have frank conversations about who will do what, and make sure the burden is not placed entirely all on one person. If somebody can’t be around to help, they may be able to assist financially.

Have the Tough Conversations Early

There are few things worse than an incapacitated parent who didn’t make long-term care (LTC) plans. Talk to your parents about their healthcare wishes, including when they may not want further measures to be taken. Again, discuss LTC insurance. Determine who gets power of attorney early, especially if you have siblings. It’s much better to have these tough conversations while everyone is still able to make informed decisions. If a diagnosis of a degenerative disease, such as dementia or Parkinson’s Disease, is made, sit down and talk through the plan. Involve their care team to help keep someone with Parkinson’s home as long as possible.

Supporting Family Caregivers for a Stronger Future

Working with a financial advisor can help you defeat the “What If” Monster before it shows up by having a plan for your parents’ care ahead of time, and by navigating your options when a crisis happens. Even if you haven’t pre-planned, we can help you make informed decisions during a challenging time.

A comprehensive financial plan is the best way to navigate all of your major life transitions, including this one. Contact CrossleyShear to talk about your long-term financial goals, whether you are facing the caregiver “What If” Monster or not.

Every investor’s situation is unique and you should consider your investment goals, risk tolerance and time horizon before making any investment. Prior to making an investment decision, please consult with your financial advisor about your individual situation. The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee that it is accurate or complete, it is not a statement of all available data necessary for making an investment decision, and it does not constitute a recommendation. Any opinions are those of Dale Crossley and Evan Shear and not necessarily those of Raymond James.