Nurses and Kids Going to College?

Most of us must choose and that's not an easy thing to do - but it could be crucial to your retirement.

Many Americans, nurses included, will find that they will have to delay retirement and work longer to reach their financial goals. We are living years longer and it takes more money to make that work.

A principal reason retirement is delayed, too, is that too many parents prioritize saving into a child's college fund over their own retirement plans.

Putting money into future college classes isn't going to help your kid if they end up having to support you in your old age - right when they should be saving for their own retirements.

It can be a difficult conversation, one I have often with clients, and it's no easier a conversation between clients and their own kids. Who wants to deprive their children of their dreams?

Nurses especially have a tough time of it. The hours are long and the opportunity to learn about investing are few. After working long shifts, parenting and the grind of a commute there isn't much mental energy for thinking about money.

Here's the quick version: Don't put money in a 529 account for your child. Put it in a retirement account for yourself. Your son or daughter can get a loan for college. You can't get a loan to pay for your retirement.

The big reason is time. You cannot make more of it, while your kids have nothing but time. The whole reason that saving regularly for retirement works is compound interest, and that requires serious time, decades.

The money you set aside today into a tax-deferred IRA will grow and compound over the years. Compound growth is like magic. A dollar saved turns into two, then four, then eight. Prudently invested money cannot help but grow into a major nest egg.

Picture a pond. It has one lily pad on it. The lily pad doubles every week. There are two lily pads, then four, then eight. The pond is filling up all by itself.

In the second-to-last week, the lily pads cover half the pond. By the very next week, the entire pond is covered! Remember, the lilies are doubling. All of them.

That's how compound interest works. You need to save early and consistently, but by the end of your saving years the amount of money in your account can be enormous.

People underestimate how powerful and important time is to long-term investments. They chase immediate priorities, then fail to use that time when they are young to get started saving and investing. It costs them big in the long run.

Yes, buy a house if you like. Pay off your student debts, of course. But definitely make retirement saving a priority, and you should make it a higher priority than higher ed for your children.

You can always help your kids later, when your retirement is secure. Give them tax-free cash (the IRS allows it) that you don't need to spend. Buy them cars or vacations if you like, anything.

Just don't give them those dollars now, while that money could be invested and compounding into real retirement security for you. If you end up not needing it all, they'll get it anyway, right?

I often tell my clients that choosing retirement over higher education doesn't mean that you can't help your children financially. It doesn't mean you are a bad parent.

It does mean that you are taking your own future seriously, and that's a powerful lesson for any child at any age.