Just before any flight takes off, your friendlysteward/stewardess demonstrates how to use the oxygen mask “in theunlikely event of cabin depressurization.” What's the first thingyou're told? “Apply the mask to yourself before you give it to achild or anyone else.” Are they advocating a selfish act? No. Theyrealize your child is more likely to survive if you're consciousand the child is unconscious, rather than the other way around.

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The same methodology can be applied to the retirement savingsversus paying for college scenario. At some point, most parentswill face this dilemma. (It's not an either/or proposition, butI'll be treating it that way for the purposes of this article.)Many financial professionals insist parents take care of themselvesfirst before they tend to the children. They want parents to savefor retirement before they spend a penny on their kids'education.

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Is this smart?

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In more ways than you think.

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The favorite justification for placing retirement savings beforepaying for college is the adage: “You can take out a loan forcollege, but you can't take out a loan for retirement.” Though trueand insightful, the damage of paying for college in lieu of savingfor retirement is costlier than parents may think.

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According to the Sallie Mae report “How Americans Pay forCollege—2016,” the average parent pays $11,000 out-of-pocket foreach year of college. That's $44,000 per child. (This number, bythe way, does not include loans, which average $7,700 per year.) If$44,000 per child seems high, it gets worse. Much worse.

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A 2013 New York Times article stated the average age of a parentwith a 17 year old was 46½ (45 for women, 48 for men). Let's saythey pay the average amount out-of-pocket to send little Johnny tocollege. Furthermore, let's say they pay this in lieu ofcontributing to their 401(k). That's $11,000 less per year intotheir retirement savings account.

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If we growth that annual “missing” contribution of $11,000 peryear for four years at 8 percent per year until the requiredminimum distribution age of 70½, we'll see a shocking revelation.Those parents might have thought they paid out only $44,000 fortheir child's education, but, in reality, the number was muchhigher. The retirement value at age 70½ would have been$270,000.

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Here's where it gets much worse. If we assume a 4 percentwithdrawal rate, our unfortunate parents are out $11,000 a year inretirement (assuming the portfolio's grows at 4 percent per year;thus, keeping the total post-retirement value of the “missing”contribution the same).

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So, that $11,000 tuition payment isn't just a four year thing,it's a forever payment during the parents' retirement years. Theparents would be better off having their child take out more inloan money.

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Just make sure the child majors in engineering so the ensuingjob pays enough to pay back the college loan.

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Christopher Carosa

Chris Carosa has been writing a weekly article and monthly column for BenefitsPRO online and BenefitsPRO Magazine since 2011 and is a nationally recognized award-winning writer, researcher and speaker. He’s written seven books, including From Cradle to Retire: The Child IRA; Hey! What’s My Number? – How to Increase the Odds You Will Retire in Comfort; A Pizza The Action: Everything I Ever Learned About Business I Learned By Working in a Pizza Stand at the Erie County Fair; and the widely acclaimed 401(k) Fiduciary Solutions. Carosa is also Chief Contributing Editor of the authoritative trade journal FiduciaryNews.com and publisher of the Mendon-Honeoye Falls-Lima Sentinel, a weekly community newspaper he founded in 1989. Currently serving as President of the National Society of Newspaper Columnists and with more than 1,000 articles published in various publications, he appears regularly in the national media. A “parallel” entrepreneur, he actively runs a handful of businesses, including a small boutique investment adviser, providing hands-on experience for his writing. A trained astrophysicist, he also holds an MBA and has been designated a Certified Trust and Financial Advisor. Share your thoughts and story ideas with him through Facebook (https://www.facebook.com/christophercarosa/)and Twitter (https://twitter.com/ChrisCarosa).