When you get of a certain age, you realize that you've got some big expenses to save for. Your retirement is looming decades in the future, but your children's education is also looming in the future. What should you contribute to both or should you just contribute to one at the expense of the other? Your first priority is to make sure you can survive on your own in your retirement. Don't plan to rely on your kids.
Therefore your savings goal is to focus on your retirement savings even if it means not saving well for your children's college. Make sure you start saving for your retirement when you're young so that compound interest has time to really work it's magic on your money. The younger you start investing, the more your money will grow. If you invest $10,000 when you are 45 at a conservative 8% rate of return, then when you're 65 you'll have $46,609. However if you invest the same amount when you are 35 at the same rate of return, you'll have $100,626. Quite a lot more isn't it? All that extra money just by saving it ten years earlier. Now if you started even earlier and saved $10,000 at 8% at the age of 25, you have $217,245 at the age of 65. This shows the earlier you save, the better off you'll be.
I know you feel it's your duty to provide for your children's education. But many have gone to college on their own dime. I actually think that if the kid pays for their own college education, they'll be more careful with their money and not take college as a four year party. There are many financial aid options, scholarships available for motivated students. Hopefully you will have instilled some good personal finance advice into them and they will be able to handle living cheap so they don't have to take out many loans. Pretty much everyone I knew in college had student loans and also worked. They also had the best grades, probably because they were very motivated to succeed.
If you start saving for retirement and decide to start saving to help with your kid's college, then don't fret. At least you've got a head start on your retirement savings. The compound interest on your retirement savings will help that pile of money grow while you focus on the college fund.
