(This article originally appeared in the September 2022 issue of Military Officer, a magazine available to all MOAA Premium and Life members. Learn more about the magazine here; learn more about joining MOAA here.)

Saving for your child’s education and saving for your own retirement are competing goals that every parent faces. But the struggle to prioritize has never been more difficult than it is now.

According to a recent report from Georgetown University, the cost of college has gone up 169% over the last 40 years, far outpacing inflation over the same period. And the average public university student borrows just over $30,000 to attain a bachelor’s degree.

No parent wants their child to be burdened by crushing student loan debt. But a common piece of advice given by many financial educators (myself included) has been that one should always focus on retirement savings first. After all, it is possible to take out a loan for college. There are no such loans for retirement.

[MORE FROM MOAA: Retirement Resources]

It’s important to start investing for your retirement early so your savings have more time and potential to grow, and so you can take advantage of compound earnings. These same arguments can be made for saving for your child’s education. The earlier you open a 529 education savings plan or other tax-advantaged account for your kids, the longer that money has time to grow in the market and the less money you ultimately have to sock away.

How can parents navigate this dilemma? The answer is that you will probably have to find a way to save for both education and retirement goals at the same time.

Where to Begin 

Before you save for any long-term goals, you should have a sizable emergency fund in place. Then, if you have an employer retirement plan that matches your contributions, maximize that employer match before saving for any other goals.

Even if your employer doesn’t match your contributions, or you don’t have a workplace retirement account, you should seek to save 10% to 15% of your
pretax income in some type of retirement vehicle such as an IRA or, if you are self-employed, a solo 401(k).

[RELATED: What You Need to Know About the Thrift Savings Plan]

Have Reasonable Goals 

Once you have made sure that you have enough for an emergency and have set aside some money for your own retirement, you can start saving for your children’s education.

Educate yourself on the potential costs involved, and then decide what portion of that you are planning to cover. There is no firm rule that says you have to pay for 100% of your kid’s higher education. Maybe you can only cover half of their costs, or perhaps you’re just willing to cover the cost of in-state public college tuition.

[RELATED: MOAA Education Assistance]

Every college is required to have a net price calculator on its website to give families an idea of how much the cost of attendance would be. Many schools consider the Expected Family Contribution (EFC) when determining a student’s eligibility for financial aid. The College Board website features an EFC calculator to help you determine your potential expected contribution.

Get Creative

If you can cut college costs, then that’s less money that will have to come out of your pocket.

There are many scholarship opportunities out there, including some targeted specifically at military kids. Online search engines such as Fastweb, Cappex, Unigo, College Board, and others make it easy to apply.

If your child can take AP or dual enrollment classes, or earn college credits through a College-Level Examination Program (CLEP), you might be able to shorten the time it takes to earn their degree. Or maybe they can start at a local community college (saving both on tuition and room and board) and then transfer to a four-year institution later.

Also, encourage relatives to contribute to a 529 plan rather than gifting toys or other “stuff.” Almost any 529 plan will accept gift contributions by check, and there are now even Gift of College gift cards available at over 3,000 retail locations.

Be Upfront With Your Kids

Juggling saving for your retirement while planning for your kid’s college education is tough.

It’s important to manage expectations by keeping your kids informed of what kind of contribution they can expect from you. In my case, I’ve been upfront with my girls, letting them know my husband and I have set aside money for them, but that we must also focus on our own retirement. At the end of the day, taking care of ourselves puts us in a better position to help others.