Should Personal Loans be Used to Fund Retirement or College?

Thursday, October 15th, 2009 By

The Future: Retirement or College?

Personal loans for funding college or retirement? Think carefully. (Photo: flickr.com)

Personal loans for funding college or retirement? Think carefully. (Photo: flickr.com)

One key question Americans are asking themselves is whether to use personal loans as a means of funding retirement or college funds. There is a careful balance between choosing to put hard-earned money into a person’s long-term future, or their children’s. Senior financial advisor Evelyn Dinkins recently reported on why consumers should be looking to their own retirement funds before their children’s college account.

An Expert Sounds Off

Dinkins stated that there are some very important points to saving for retirement religiously. First of all, retirement is funded one way: consumers resolutely saving. With the state of Medicare and Social Security, ancillary funding is most likely not going to be available for much of the future.  Consumers are most likely reaping the last benefits of these programs now; future generations will be on their own. For this reason alone, it’s important to realize that saving today is what’s going to take care of the average American’s future.

In addition, Dinkins spoke on how retirement funding is pretty much a fixed cost. If a consumer knows their cost of living and can project inflation somewhat accurately, they can pinpoint how much they need to save for a comfortable retirement. This amount is non-negotiable, unlike a college fund. Plus it’s important to take stock of funds at various times throughout the career to reassess if retirement fund goals are met, or if more savings need to go into the account.

Finally, with employers willing to match 401(k) contributions, it benefits all employees to take advantage of the extra money for their futures. Dinkins subscribes to the philosophy that people should “fully save for retirement and if there’s money left over, then save for education.”

On the Other Hand, There’s College

College has a good number of ways to be funded. Personal loans, scholarships, grants, and part-time jobs can all contribute to a college fund. Plus there are ways to alter this cost by going to a community college for the first two years of an education or live at home for the duration of college rather than dorm living. Schools can be chosen for a specific budget and other cutbacks can be used to save money.

How to Face Reality

Dinkins states that when a child is about 16, parents should have a serious discussion about their college future. Parents need to lay out specific financial guidelines, making it a point to communicate the total amount they can contribute. Children should understand that anything above and beyond the total parental contribution will need to be funded by their own efforts. Even if parents are able to totally fund a college experience, children should be aware of the total cost. Dinkins explained college funding to her own child this way: “My daughter looked at one particular school and I just had to say that can’t be on your list unless you want to come out with a massive student loan.”

Retirement Funding is a Priority

In the end, the temporary cost of college can be funded with a wide variety of tools such as personal loans, scholarships and grants. However, retirement funding is going to be a result of proactive savings. If their retirement years aren’t prioritized, then retirement may need to be postponed indefinitely. The bottom line is that Americans need to make sure their retirement futures are secure prior to contributing to any other funds.

Apply HERE for Personal Loans!

By clicking apply now I agree with and have read the full terms of use.

Submit
Previous Article

« Will Social Security Last for Me?

Many are retiring, and this generation must fund their retirement via wage taxes. Leaves one to wonder: Will we be able to fund our own retirement? Is this working for you or against you? Will you be needing more payday loans in your golden years? (Photo: wikipedia.org)
Next Article

Finding Debt Relief Can Be Simpler if People Exclude These »

Some commonly accepted expenses are unnecessary and cutting them from a budget can make finding debt relief easier. CLICK HERE to read! Hope they took out the life insurance instead of the accidental death insurance. Talk about debt relief… (Photo: flickr.com)

This post has one comment

  1. Credit cards for bad says:

    it is good to have retirement.. :)

Trackbacks / Pingbacks

Leave a Reply

Other recent posts by bryanh

Will Social Security Last for Me?

Many are retiring, and this generation must fund their retirement via wage taxes. Leaves one to wonder: Will we be able to fund our own retirement?
Is this working for you or against you? Will you be needing more payday loans in your golden years? (Photo: wikipedia.org)

Loans are Hard to Come By, But Payday Loans Still Pay Out

With banks making lending policies stricter, payday loans are helping consumers find the funds they need. CLICK HERE to read now.
Don't go with blinders on when you need money this recession. Payday loans pay. (Photo: flickr.com)

Is Cutting Back on Insurance A Good Way to Find Debt Relief?

Some consumers are cutting back on insurance coverage to find debt relief, but how wise is this? CLICK HERE and see what you think.
Think a cut in insurance cost is a good debt relief idea in this situation? (Photo: flickr.com)