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Millennials Prefer Saving for Kids' College Rather Than Their Own Retirement
Monday, April 10, 2017 6:30 AM

With an average of $9,100 in student debt, according to TD Ameritrade surveys, Millennial parents are all too aware of the financial realities of higher education. About one-third expect to still have loan payments when their children leave for college, and they don’t want their children to inherit similarly poor financial fortunes.

For this next generation of parents, paying part of Junior’s college bill is not just something they plan to do; it’s one of their top priorities. One-third expects that they'll still be paying down their own student loans when their children reach college. This helps explain why roughly one in five Millennial parents (19 percent) say education for their children is their top financial priority, equal to the number that identified emergency savings as tops. Retirement savings came in third, at 15 percent of parents.


  • Latino/Hispanic and Asian Millennial parents are twice as likely as Caucasian Millennial parents to expect to pay all education fees (43, 42, and 23 percent, respectively).
  • Although nearly six in 10 (57 percent) Millennial parents do not expect their parents to help with college fees, one in five (19 percent) grandparents contributed to a grandchild’s college savings in the past year.
  • Millennial parents who are saving for their children’s education are saving an average of $310 per month, with grandparents chipping in an additional $205.
  • Saddled with an average of $9,100 in student debt themselves, Millennial parents know all too well the high cost of a college diploma. It’s clear they want to pave an easier path for their kids, but it shouldn’t come at the expense of their retirement (for which there are no loans, grants, or scholarships).

“Nearly one-third of Millennial parents say they would work longer to make up the difference, but as we age, that’s not always possible,” said Dara Luber, retirement and long-term investing expert at TD Ameritrade “Their children, on the other hand, have more options to help cover the cost of college. If you’re able to swing it, parents can of course sock away money in a college fund or ask grandparents to contribute to future education needs, rather than the toy box. Just be steadfast in your own goals. Parents are much closer to cracking open that nest egg, and you want it to be as full as possible.”

No matter the order of their financial priorities, all Millennials can benefit from having a clear financial plan in place and holding themselves accountable to concrete goals along the way. Setting financial goals is key for them and their children to working toward a secure financial future.

TD Ameritrade found that, on average, each Millennial parent receives an average of $11,011 per year in combined financial support and unpaid labor from their parents.

About 54 percent of grandparents reported that saving for retirement while supporting adult children is “very stressful”—but 80 percent won’t decrease their contributions. Neither will they (98 percent) lessen aid for their aging parents.

Millennial parents are refusing similar sacrifices to bolster their retirement funds. About 95 percent said they aren’t willing to lessen financial support for aging parents, and 88 percent won’t spend less on their children.

“Nearly one-third of Millennial parents say they would work longer to make up the difference, but as we age, that’s not always possible,” Luber said in a press release. “Their children, on the other hand, have more options to help cover the cost of college.”
Guess what, the “pay yourself first” financial strategy is still advised.

“Certainly make sure that you’re covering your own retirement first,” Luber said. The emergency fund comes second and education third, with specific allocations dependent on income. I think it’s important to save early and save often and note that every little bit that you’re saving, whether it be for your own retirement or for your children’s education, means more money that you or they could have in the future.”