College: A Major Roadblock on the Road to Retirement
Alice Whinnery
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Millions of Boomers and Gen Xers heading toward retirement are incurring a monumental roadblock: College. A recent CNBC Your Money article highlighted some of the reasons savers are borrowing greater amounts from their 401(k) plans (1), but many of the Advisors and Plan Providers we talk with report too many are using their retirement accounts to pay for college for themselves or a family member.
The latest SoA Study found 93% of parents and 66% of grandparents of future college-bound students now struggle to balance the high cost of college with their retirement goals. (2)
One reason is skyrocketing costs. Unprepared to pay tuition up to $40,000/year for public universities or $60,000/year at private universities (3), retirement accounts are too often used to cover these costs. But the real sticker shock comes later when they realize that 91% of colleges mislead parents on costs, fees, and the actual amount of Financial Aid students will receive (4), and they’re forced to pay tens of thousands more than anticipated.
Other reasons for retirement withdrawals – or the inability to save more toward retirement during their peak earning years – are the costly mistakes students and parents make prior to registering for college. They fail to ask the right questions, evaluate money-saving resources, explore alternatives, or consider the tough ‘What If’ scenarios prior to making life-changing college decisions.
One of the many crucial scenarios is, ‘What if my student doesn’t graduate in 4 years? How much more will it cost, where will the money come from, and how will paying this additional expense affect my retirement?’ When 79% of Black, 73% of first-generation, 68% of Hispanic, (5) and 59% of all students fail to graduate in 4 years, neglecting to evaluate this key decision prior to registration is a major contributing factor for depleted retirement accounts today.
After hearing thousands of stories from parents and grandparents on how college mistakes destroyed or significantly delayed their retirement, I asked leading Financial and Academic Advisors throughout the U.S. what information families need to prevent these problems. Their feedback provided the foundation for the first Financial Wellness College Tools to equip parents and grandparents of college-bound students with the skills and knowledge to prevent this costly roadblock to retirement.
Our objective was not to address everything families ever wanted to know about planning for college, but provide an advanced e-learning platform that focuses on the latest college traps and how to avoid them … then highlights specific (and often overlooked) ‘What If’ decisions to discuss with their Advisor or Plan Provider to ensure a quality education for the student in their life without jeopardizing a secure retirement for themselves.
As parents and grandparents plan for college in 2024 and beyond, and begin to apply for FAFSA (6) at the end of December, these unique digital tools are now available through employers, Advisory, CPA, Financial Wellness, and FinTech firms.
About the Author:
Alice Whinnery, CEO of the LFE Institute and former CPA with PwC, has been a passionate advocate for Financial Wellness education and leading IT solution provider for more than two decades. With four college-bound grandkids, she realized too many parents and grandparents make costly college mistakes, spend thousands more than needed for college, are unaware of valuable resources, and fail to ask the right questions. This motivated her to collaborate with leading Financial and Academic Advisors nationally to create the first unbiased Financial Wellness College Tools utilizing the power of SCORM-LMS technology. These cutting-edge e-learning tools are designed prevent roadblocks to retirement by providing essential content missing on college sites and Financial Wellness Programs today. ?
Contact Information for the LFE Institute, LLC:
LinkedIn: Contact Alice Whinnery
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