Skip to Main Content
Prudential Financial
Prudential Women and Money
Banner Women and Money What's happening in your financial life?

The Savings Dilemma

What Comes First – College or Retirement?

While saving for a child’s higher education is certainly important, so is preparing for a comfortable retirement. It is possible to do both, but you have to decide how to divide the money you want to save.


There’s no way of knowing what kind of school your child will want to attend and how much it’s going to cost in the future. Grants and scholarships are available. But you may need to take out student loans. Be aware that there are long-term financial implications of taking out student loans. The cost of tuition and loan repayments might affect your ability to save for your own future.


Retirement First, College Second

Putting money away for college is important, but it shouldn’t come at the expense of retirement savings, says Robert Fishbein, a Prudential tax attorney.


 "As a general rule, it’s better to maximize retirement savings first, even to the exclusion of separate savings for college. You can always borrow to pay for a child’s college, but there are fewer ways to borrow for retirement,” Fishbein says. He adds that you can often borrow against retirement savings or withdraw funds if the money is used for college tuition. “The tax law provides certain exemptions for money withdrawn for higher education costs.”


Also keep in mind that money set aside for a college education may impact your ability to obtain financial aid. That doesn’t mean you shouldn’t save for college. But the money you do save should provide the greatest long-term benefit.

Insurance issued by the Prudential Insurance Company of America, Newark, NJ, and its affiliates. Each is a Prudential Financial company that is solely responsible for its own financial condition and contractual obligations. Our policies contain exclusions, limitations, reduction and terms for keeping them in force. A licensed financial professional can provide you with complete details. The availability of other products and services varies by carrier and state. Prudential Financial, its affiliates, and other financial professionals do not render tax or legal advice. Be sure to consult with your personal tax and legal advisors.