American parents are putting college savings ahead of retirement - exactly the trap experts warn against

college parentsAriel Skelley/Getty ImagesSome parents are apprehensive of student loans.Ariel Skelley/Getty Images

  • More than half of American parents are saving for their kids' college ahead of their own retirement, a survey by T. Rowe Price found.
  • Some parents are apprehensive about student loans, the survey found, and may be sacrificing their retirement savings to shelter their kids from future debt.
  • But one financial planner says it's a mistake to ignore your own financial future, especially if it means having to rely on your kids during your golden years.
  • Visit Business Insider's homepage for more stories.

For many American parents, paying for college tops the financial to-do list.

According to a recent survey of about 1,000 parents from T. Rowe Price, 53% of respondents said saving for college is a higher priority than saving for retirement.

Sixty-eight percent of respondents even said they would be willing to delay their own retirement to pay for their kids' college education, and 24% said they've already taken funds earmarked for retirement to pay for college expenses in the last two years.

According to Sallie Mae's latest "How America Pays For College" report, parents and students shoulder the largest portion of college costs. Specifically, parent savings, investments, and income cover 30% of the average student's college expenses as of the 2018-19 academic year.

While footing the bill for college, or even a portion of it, is well-intentioned, parents who are sacrificing their own financial stability to do so may be misguided, according to experts. College comes sooner than retirement on most families' timeline, to be sure, and a degree offers a clear leg up in the working world, but parents shouldn't be exhausting themselves financially.

"Your kids can take out loans for college, but you can't take out loans for retirement," Sophia Bera, a certified financial planner and the founder of Gen Y Planning, previously told Business Insider. 

Moreover, the earlier you start investing your retirement savings, the sooner compound interest can get to work. Those who put off saving for retirement after college is paid for will miss out on years of investment growth.

Some parents are attempting to shelter their kids from student debt

Still, the survey found that many parents are apprehensive when it comes to borrowing money. One-fifth of the respondents aren't willing to let their kids take on any student-loan debt to pay for school, and 16% aren't willing to take on any debt themselves.

Student-loan debt is a worsening problem for college graduates - the average borrower owes about $28,000 when they graduate. It's no surprise then that parents are hoping to steer their kids away from borrowing, but Bera says they may not be the saviors they think they are.

Barron's reporter Reshma Kapadia previously explained that financial experts traditionally recommend securing an emergency fund and maxing out tax-advantaged investment accounts before putting any extra savings toward their kids' college tuition. But lack of planning leaves some parents scrambling for funds as college approaches.

Ultimately, it's best to steer clear of tapping tax-advantaged retirement accounts, financial experts told Kapadia, and treat "college like any other investment - through the lens of risk and return." If the child is the one taking on the debt, they should be able to repay it in under 10 years.

"The best gift you can give your children is securing your own financial future, so that they don't need to take care of you in retirement," Bera said. "As your wealth increases, you may be able to offer them gifts to help them with expenses later on, or set up 529 Plans for your grandkids, but start today by taking care of yourself."

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