Many American parents face a struggle in their golden years because they are raiding their retirement nest eggs to pay for their children's college tabs, according to
a new T. Rowe Price survey.
Parents who follow such a course might regret it later, in the view of the asset management firm's experts.
The 2015 Family Financial Trade-Offs Survey included responses from 2,000 parents who have a retirement account with kids ages 15 or younger.
The results showed that 49 percent of those surveyed would be willing to delay their retirement to pay for their children's college education, and 51 percent would be willing to get a second or part-time job to pay for it.
In addition, 53 percent agreed with the statement: "I would rather dip into my retirement savings to pay for my kids' college education than have them take on student loans."
One stark finding was that 49 percent said they did not expect ever to retire.
Moreover, 52 percent of the respondents said they were willing to take on $25,000 or more in debt to pay for their kids' college education, 23 percent were willing to take on more $75,000 and 9 percent declared they would borrow "whatever it takes."
"Parents are making a mistake when they don't prioritize their own retirement over college costs," said Judith Ward, a senior financial planner at T. Rowe Price.
"There are many ways to pay for college, and there is a wide variation of price tags for college degrees. But outside of Social Security and a pension, the way to fund your retirement is through personal savings in a tax-advantage retirement account."
The company's 2014 Parents, Kids & Money Survey found that 52 percent of parents believed it was a higher priority to save for their children's college rather than their own retirement.
T. Rowe Price advocates Americans should save at least 15 percent of their salary, including any match from their employers, for retirement. Thereafter, Ward recommends parents save enough to cover at least half the cost of a four-year college education for their children.
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Our research shows that saving instead of borrowing can cut college costs in half. We recommend using a 529 account, because they provide tax benefits and flexibility for college savings that aren't available with any other kind of account."
In a guest column for
Forbes, personal finance expert Robert Farrington echoed T. Rowe Price's advice.
"Parents owe their children emotional support and guidance as they begin the college process, but parents do not owe their children a college education, if the cost would put them in financial peril," Farrington wrote.