Cost of college impacting Baby Boomers’ retirement plans - KMOV.com

Cost of college impacting Baby Boomers’ retirement plans

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ST. LOUIS, Mo. (KMOV.com) -

The rising cost of college is impacting many baby boomers’ retirement plans, as parents try to foot the bill for their children’s higher education, according to financial experts.

The Consumer Financial Protection Bureau says the average student loan debt in 2015 for borrowers over 60 was more than $23,000. That is double the amount from a decade ago, with four times as many older Americans facing student loan bills.

“This kind of debt can be staggering for baby boomers,” said personal finance expert and author, Crystal Oculee. “For so many, it does have a significant effect on their retirement planning. While their colleagues and friends are getting ready to enjoy a secure, comfortable retirement, they’re faced with tough decisions including whether to live on less, work longer or take a part-time job. If they default on these loans, their Social Security checks can be garnished. So, it can certainly have a global impact on their finances.”

In ways, this dilemma is unique to this generation. Oculee cites an increase in college enrollment coupled with rising tuition costs and the 2008 market crash.

“I think most parents want their kids to have a good future, solid employment and security. In today’s world, that means going to college. As I mentioned before, college enrollment is on the rise. As a parent, you don’t want your child to get left behind. For a lot of folks that meant helping their children go to college by any means necessary, even if they had to sacrifice their income to make it happen,” said Oculee.

While funding your child’s education might feel like the right thing to do, some financial experts warn that it might not be the most fiscally responsible idea.

“First, a college education does not automatically guarantee a high income or even a living wage so the payoff might not be worth the sacrifice. Secondly, since these kids have decades longer than their parents to pay off these loans, it’s financially more responsible for the kids to shoulder that burden, not parents who are trying to save for retirement. Finally, people are living longer than ever before, so retirees need more money to sustain their expenses,” said Oculee.

However, for those who have opted to take that route, Oculee has some recommendations to get family finances back on track.

“One thing people can do to lessen the burden is compare their student loan interest rates with mortgage rates. In some cases, it’s advantageous to get a mortgage on your home or extend your current mortgage to pay off the debt. Another tip is to make sure your children help you pay off this debt. This is an important lesson in financial responsibility. You should make it clear that you have financial responsibilities toward your future and that, as a family, you must work together to make sure everyone is enjoying a healthy, happy life,” said Oculee.

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