According to the College Board, the average ‘sticker price’ to attend an in-state public university rang in at $24,061 last year; private universities averaged $47,831. That’s just for one year.

Factor in a retirement income of $50,000 and according to the 4% theory, you’d need to save $1.25 million by the time you retire. While there is no magic number for retirement or college savings and the actual amount needed varies from person–to-person and family-to-family, just the thought of saving for two huge financial goals at once can be so overwhelming that many parents feel paralyzed and unsure of how or where to start.

Whether you’re a new parent or empty nester, if you feel puzzled over how to save for retirement while also saving for a child’s college education, a few practical principles can help.

 

Know Your Priorities

While it is possible to save for retirement and college at the same time, it’s important to sit down and do the hard work of determining which goal matters most for you.

“Almost all parents have a strong desire to help their kids have a better life, and a college education is often a big part of that,” says Doug Wiley, CFP®, Vice President & Trust Officer for the Trust Company.

“However, desire and responsibility are two different things; parents’ responsibility is to get their children to the point in life where they can take care of themselves. If they can afford to pay for all or part of a child’s college education, that’s great. If not, they won’t be doing their children any favors by being destitute in their older years because they didn’t prioritize saving for retirement.”

Staring down the reality of needing to save less for a child’s college education so you can save the right amount for retirement can be daunting for parents, but it’s a necessary first step. A critical second step is to plan out how you will actually achieve both financial goals.

 

Have a Plan

The first part of any parent’s saving plan should involve participating in an employer’s retirement plan when it offers a match. “If your employer offers to match your contributions to a 401(k) plan, do everything you can to take full advantage of that match,” says Mark Knackendoffel, President and CEO for the Trust Company. “That’s free money.”

Next, he advises, is factoring into your plan how much you can save per month for college. After that line item, if you still have available funds to allocate toward saving, consider how much more you can contribute to your retirement saving goal.

“Saving for retirement may involve cutting expenses or curbing your lifestyle somewhat,” says Knackendoffel. “The most important thing, though, is to have a plan in place. Put it on paper so you can see where all the dollars are going and that you have a purpose for every dollar.”

 

Involve Your Kids

Especially when it comes to saving for college, parents shouldn’t make the experience a one-sided affair. Involving children early in the process teaches them financial responsibility and makes saving a family goal. “College funding comes from several sources – a child’s personal savings, scholarships, parents, and even grandparents can all play a role,” says Knackendoffel. “No one else is going to contribute to your retirement, so involving your kids as young as nine or 10 years old is a smart strategy.”

Teaching a child early to save for major financial goals, builds an appreciation for the various costs of living and helps them become financially literate from a young age.

 

Making Up for Lost Time

Finally, if you find yourself behind the curve on saving for retirement, college or both, all is not lost. While there’s no magic answer, there are sound principles that when put into practice, will pay off. “Get rid of debt and live within your means,” says Wiley. “Pick investments with low costs and have advisors you trust help you get into appropriate products so you aren’t taking any steps backwards.”

Life is often backwards. When you’re young, you have all the time in the world to save for the future and not much money to set aside. When you’re older, you have less time, but you may be earning enough to make up for the time you’ve lost.

The bottom line is to figure out your priorities, make a plan for achieving them, live within your means, and execute your plan in a disciplined manner. Taken together and followed faithfully, these steps can lead to financial health and well-being—not just for your retirement, but for your kids’ future as well.