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U.S. Census figures reveal that America has 77 million baby boomers. Every seven seconds, an American turns 50. That’s about 12,500 people per day. AARP projects that by next year (2015), boomers will constitute 45% of the U.S. population.As college tuition rates skyrocket, new research from the Federal Reserve Bank of New York reveals unexpected if not shocking results: Americans 60 or older hold about $36 billion in student loan debt, more than 10% of which is delinquent, and the increasing burden of that debt is crushing those who can’t afford to pay it back.
The recession has exacerbated the effect of loan debt for senior citizens, who have found it increasingly hard to find good paying jobs in an ever more technology-savvy society. Student debt, however, is not the only factor. The largest source of debt for seniors, compounding the student debt, is home mortgages and home equity lines of credit. Retirees are just as likely to use their home equity to “live the good life” as are younger people.
“Skyrocketing college costs and the death grip of increasing student loan debt have led many baby boomers to raid their retirement nest egg to help pay for college for their children,” advises Chicago-based financial adviser, author and teacher Thomas Chrobak. “Paying for college in addition to saving for retirement, without sacrificing current lifestyle, is the challenge. But if things are set up right, it can be done.”
U.S. New & World Report’s The Smarter Investor addresses the problem with this bold advice: “Paying for a child's education may cause consideration of using retirement money, but refrain… For a lot of parents and families, paying for college poses a massive financial challenge, and often, a choice: Do we continue to put money away for our own retirement, or do we divert funds to assist a child with the expenses of college,” the author posits.
Cleverly, Forbes calls it “The Parent Trap: Pay for Kids College or Save for Retirement,” and approaches it this way: “As tuition rises and 401(k)s shrink, how can a family balance the competing goals of saving for college and retirement. There’s no nice answer to that question. Parents are taking on truckloads of debt to help pay for their children’s college costs and even deciding to delay their retirement. Good parents are selfless, sacrifice all for the good of the babies… While it may seem heretical, financial advisers across America have but three words, “no, no, no”.
“60-70% of the people who walk into our office have put aside and dedicated savings to defray college tuition for their children, at the expense of their retirement plan,” Mr. Chrobak affirms. “It does not have to be that way. Both can be achieved. First, there are many options to consider at the tuition level. Even at top colleges, regardless of parental income, tuition can be reduced by maximizing tuition discounts and finding scholarship money. Second, there are ways for parents to pay the remaining amount without raiding their retirement accounts.”
“While a college education has been elevated to a birth-right,” Forbes suggests, “that’s simply not practical in some families…” But whatever the case, don’t go it alone. It’s a tricky affair, and there are people out there who know how to balance the competing concerns.
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Thomas M. Chrobak is a financial advisor, speaker and author with over 15 years experience in the financial services industry. He is famous for helping families that didn’t save enough for retirement get back on track. As President of Chrobak Advisory Group and College Planning Specialists, Inc., he and his team empower clients to build financial legacies beyond their lifetimes, while preserving their estates to pay a lifetime of income during their retirement years. In addition, he is one of a select few financial advisors to receive the designation of Certified College Planning Specialist (CCPS), a designation that affirms his unique experience and skill set that enable him to position his clients for maximum grants and scholarships on their children’s college education.
Contact Info:
Name: Thomas Chrobak
Email: Send Email
Organization: Chrobak Advisory Group
Phone: 847-737-7533
Website: http://chrobakadvisory.com/
Source URL: http://councilofeliteadvisors.com/liftmedia
Release ID: 69816
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