When we think of the "sandwich generation," we think of baby boomers who are caught between caring for their aging parents and their children.
But there's another type of sandwich on this generational menu: Parents dealing with financing their children's college educations without shortchanging their own retirements.
As a parent, you've made many sacrifices for your children, but this is an area where you must stand firm.
Don't blow your own retirement to help your kids through college.
"Never," said Derrick Kinney, a senior financial adviser at American Express Financial Advisors in Arlington, Texas. "People will let you borrow money all day for your kid's education, but I've never found a plan that lets people borrow money for their retirement."
I'm not advocating being cold-hearted to your kids, but I am saying you have to be realistic.
"What you have to consider is when you have multiple goals that compete for your resources, it's really the same thing as when you're going Christmas shopping," said Douglas Gill, a certified financial planner and chief executive of SummitAlliance Investment Group in Dallas. "You really have to determine how much you can realistically afford. In the end, balance is always a good consideration."
If you can afford to save for both goals, good for you. Get started right away. Rising expenses for retirement and higher education make it crucial not to procrastinate.
The earlier you start saving, the more time your money has to grow.
But if you have to choose one or the other, choose to save for your own retirement.
Longer life spans mean that you could spend as much time in retirement as you did working.
That means you'll have to save enough so you don't outlive your money and can withstand inflation, rising health care costs and slim pickings from Social Security, whatever form it may evolve into.
You should first determine what your retirement needs will be and how much you will need to achieve your goals, Gill said.
"Then figure out how much you have left over for education," he said.
If you don't have enough to fund your child's college, you can then decide whether to cut back on your retirement goals.
"Do I scale back my retirement slightly to increase the level of support I can provide my child, or let the child make up the difference?" Gill said. "There's nothing in this world that says a kid has to have his college paid off. But you have to pay for your retirement."
If you can't afford to pay for your child's full college experience, you are probably eligible for grants or loans from the federal government or other sources.
A strong argument in favor of saving for retirement first is that assets in your ret.irement accounts aren't counted against you when it comes to applying for financial aid for your college student.
Any saving that you do for college, on the other hand, can reduce the amount of aid you'd qualify for.
"While it is important to save for both college and retirement at the same time, if forced to overweight the contributions to one, I would advise that be retirement," said Bryan Clintsman, a certified financial planner at Clintsman Financial Planning in Southlake, Texas.
"You have to get yourself into a financial situation where you can be there to support your children and not be a burden on them during retirement."
Fortunately, many parents have gotten the message.
Forty-six percent of parents surveyed by Allstate Financial said they were saving equally for retirement and college.
But 14 percent said they were saving mostly for college, while putting aside only a little money for retirement. Lower-income parents, in particular, saved the bulk of their money for their children's college education.
"Though a child's education may be closer, the cost is small compared to 20 or more years of living expenses in retirement," said Casey Sylla, president of Allstate Financial.
You may not necessarily be shortchanging your kids if you make retirement savings your priority.
"If you get to college with your kid and your retirement is on track, you can always divert some of those resources for the four years," Gill said. "You don't get a second bite of the apple with retirement savings."
Resources: For more information on the Free Application for Federal Student Aid, go to
www.collegeanswer.com/paying/content/pay_aid_fafsa.jsp or www.fafsa.ed.gov.
