How Do I Balance College Savings with Retirement Planning?

Q: I’m trying to save for both my kid’s college and my own retirement, and I honestly don’t know how to do both at the same time. What’s the smartest way to balance those two goals?

A: Balancing college savings with retirement planning isn’t just a numbers game — it’s a high-stakes act of prioritization. For many families, the question isn’t whether both goals are important (they are!), but rather, how to juggle them at the same time without sacrificing your own long-term financial security.

The short answer? Retirement takes precedence — but that doesn’t mean college gets sidelined. Instead, the two goals can co-exist when you take a strategic, sustainable approach.

Here’s a breakdown. 

Get a Handle on your Costs + Get Started

A four-year college education today costs about $153,000 on average, including tuition, room, and board. Retirement, meanwhile, comes with no sticker price — but the stakes are even higher. You’re not just saving for an expense; you’re securing decades of income. Most experts recommend saving 15% of your income annually for retirement, more if you’re starting late.

Trying to do both can feel overwhelming — and yet, early action is your best ally. When you start saving is often more important than how much you save. That’s the power of compound interest. Check it out: 

• Starting at birth, putting $200/month into a college fund with a 6% return can grow to $77,000 by age 18.
• Start that same amount at age 10? You’ll only have $26,000.

For retirement, the contrast is even more stark:

• Starting at 25 with $200/month leads to about $398,000 by retirement.
• Delay until 40? That drops to $114,000.

Translation: The sooner you can get money into the market — even small amounts — the better off you’ll be. Don’t let the perfect be the enemy of the possible. Start with what you can.

Make Retirement the Non-Negotiable

If you’re choosing where to allocate limited resources, your retirement savings must come first. Why?

• You can’t borrow for retirement
  You don’t want to rely on your kids later
• Retirement assets aren’t counted on the FAFSA, which can boost your child’s financial aid eligibility
• Employer 401(k) matches = free money — don’t leave it on the table!

Cutting off retirement contributions to fund college may feel noble, but it can leave you underprepared when you need that money most. Instead, stay consistent with your retirement savings, and look for creative ways to build college funds alongside it.

Rethink What It Means to “Pay for College”

Here’s where things get more flexible — and more realistic.

According to student financial aid expert Mark Kantrowitz, you don’t need to save the full cost of college. He recommends a three-part model:

• Save one-third of projected costs before college.
• Pay one-third out of current income during college years.
• Cover the final third with a mix of scholarships, student earnings, and modest loans.

Let’s apply that to the $153,000 average cost:

• $51,000 saved ahead of time
• $51,000 paid from cash flow over four years
  $51,000 from a mix of aid, student income, and loans

This approach makes college more attainable without derailing your retirement plans.

Automate, Track, and Adjust

Once your priorities are set, your next job is to make saving as effortless as possible.

• Set up automatic contributions to your retirement and college accounts (like a 529 plan).
• Increase retirement contributions by 1% annually until you’re maxing out.
• Review your savings balances a few times a year to make sure you’re not over-contributing to college at the expense of retirement. 

Staying consistent — and slightly increasing your efforts over time — will yield better results than trying to “catch up” later with a lump sum.

Make the Most of 529 Plans

A 529 plan is the most effective tool for college savings. These state-sponsored accounts offer:

• Tax-free growth and withdrawals for qualified education expenses
• State tax deductions on contributions (in some states)
• Flexibility — you can transfer funds to another child or even yourself
• New rollover rules — Thanks to the SECURE Act 2.0, up to $35,000 of unused 529 funds can now be rolled into a Roth IRA

Don’t forget: 529 plans can be a team effort. Grandparents and other family members can contribute — and often want to! A $500 gift when your child is born can triple by college age with just a modest return.

The Bottom Line

Balancing college savings with retirement planning is a long game — but it’s one you absolutely can win with a little consistency and some smart, thoughtful choices that fit your life. Saving for your child’s future is a wonderful gift — just make sure you’re also giving yourself the gift of a secure, happy retirement. You’ve got this!