Editor’s note: This is one of the 20 tough financial questions posed in the “Do This or That?” cover story in the September 2011 issue of Kiplinger’s Personal Finance. Use the drop-down menu above to consider other financial conundrums and the right answers for you; share your own experiences and insights in the Discuss field at the bottom of this page.
Save for retirement if you are 20 years or less from retirement and you haven’t met your retirement-savings goals. In fact, if you are that close to retiring, throw everything you have at your retirement accounts. Remember, you won’t get any grants, scholarships or federally guaranteed loans to support you in your old age, nor will you have the income or time to catch up once you retire. And by forgoing tax-favored retirement accounts, such as a 401(k), you not only miss out on any employer match but also lose the tax benefit and opportunity for long-term growth that these accounts offer. You could even harm your student’s chances for financial aid: The federal financial-aid formula ignores assets in tax-sheltered retirement plans but assesses up to 5.6% of other parental assets.
Save for college if you are lucky enough to fit one of the following scenarios, says Deborah Fox, of Fox College Funding: You know you will receive an inheritance or are the beneficiary of an irrevocable trust that will cover your retirement needs. You plan to retire at midlife with a pension and start a lucrative second career. You have a guaranteed pension that will be enough to support you in old age (and that neither state legislature nor employer is likely to take away). You are in a profession in which your income will jump significantly later in your career, allowing you to catch up on retirement saving. You have income-producing property or other assets that will provide enough money to support you after you leave the workforce.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
-
-
Stocks Close Mixed After Hawkish Fed Pause
The major indexes finished in the red after the Federal Reserve kept interest rates unchanged, but left open the possibility of one more rate hike.
-
Fed Leaves Interest Rates Unchanged: What the Experts Are Saying
Federal Reserve The Fed hit the pause button again but still sees rates staying higher for longer.
-
Retirees, It's Not Too Late to Buy Life Insurance
life insurance Improvements in underwriting have made it easier to qualify for life insurance, which can be a useful estate-planning tool.
-
Best Banks for Retirees
banking Kiplinger's 2023 list of the best banks for retirees.
-
As the Market Falls, New Retirees Need a Plan
retirement If you’re in the early stages of your retirement, you’re likely in a rough spot watching your portfolio shrink. We have some strategies to make the best of things.
-
Retirees: Your Next Companion May Be a Robot
happy retirement Robots may help fill the gap left by a shortage of humans to help older adults live independently.
-
Using Your 401(k) to Delay Getting Social Security and Increase Payments
retirement Your 401(k) can be a bridge from retirement to higher monthly income.
-
How Do I Stop Robocalls From Scamming Me?
retirement The scammers have automated their efforts to separate you from your money. We have ways to make it stop.
-
A Kiplinger-ATHENE Poll: Retirees Are Worried About Money
Making Your Money Last Concerns about recession, inflation and health care costs weigh on retirees and near retirees.
-
Grandparent Scams Get Victims in Their Hearts
Scams If you get a call from someone who claims to be your grandchild in trouble and needing money right away, be wary. Don’t send any money or give any information until you verify the story.
