Episode Summary: Saving for Retirement vs College Funding
Podcast: Jill on Money with Jill Schlesinger
Host: Jill Schlesinger, CFP®
Episode: Saving for Retirement vs College Funding
Release Date: June 23, 2025
In this insightful episode, Jill on Money delves into the challenging financial decisions faced by many families: balancing retirement savings with funding college education for their children. Through a detailed conversation with listener Chris from outside Philadelphia, host Jill Schlesinger and co-host Mark explore practical strategies to navigate these financial priorities effectively.
Caller Introduction and Financial Background [03:31 – 04:29]
The episode begins with Mark welcoming Chris, who shares his family's financial journey. At 49, Chris and his 47-year-old wife have successfully eliminated their revolving debt, including credit cards and personal loans. Their remaining obligations are a mortgage of $194,000 on a home valued between $400,000 to $600,000 and his wife's student loan of $4,600 with minimal interest.
Notable Quote:
Mark [04:20]: "That's it?"
Chris [04:21]: "That's it."
Debt Repayment Journey [04:30 – 06:04]
Chris recounts the period when he faced significant financial strain. After losing his high-paying job, he took a lower-paying position, which, coupled with having two children and the ensuing childcare costs, led to accumulating approximately $60,000 to $70,000 in debt.
Notable Quote:
Chris [05:39]: "They are the best kids on the planet. And being so good and brilliant and bright, they do get opportunities... these are wonderful problems to have."
Current Financial Snapshot [06:05 – 08:31]
With debts under control, Chris and his wife now earn a combined $184,000 annually. Their children, aged 17 and 13, present upcoming financial considerations, particularly concerning college funding. They've started 529 plans, contributing $17,000 for their son and $1,000 for their daughter. Additionally, Chris had to dip into his 401(k) to manage past debts, leaving his wife with $155,000 and himself with $64,000 in retirement accounts.
Notable Quote:
Mark [07:22]: "At those schools. I mean, it may not be the case if this kid goes to Penn State because that may not be the case. Right. But those schools. Yes, for sure."
Planning for College Funding and Retirement [08:32 – 15:56]
As Chris's son, a top student with near-perfect SAT and ACT scores, prepares for college, the discussion shifts to optimizing college savings without compromising retirement goals. Mark highlights that prestigious institutions often provide substantial financial aid, potentially covering significant costs. They discuss the current state of their 529 plans and explore strategies for maximizing tax benefits and efficient fund management.
Notable Quote:
Mark [12:11]: "So putting in 10% and... my wife right now I believe is putting in 6% and she is matched."
Inheritance and Future Investments [09:08 – 20:27]
Chris anticipates an inheritance of approximately $250,000 to $300,000 following the recent passing of his parents. This windfall presents an opportunity to bolster savings for both retirement and educational expenses. Mark advises allocating these funds wisely, emphasizing the importance of maintaining an emergency reserve and optimizing 529 contributions to leverage tax advantages, particularly through the Pennsylvania state plan which offers up to a $19,000 tax deduction.
Notable Quote:
Mark [23:24]: "I would just recommend move it into a Pennsylvania plan because as a Pennsylvania resident you get a state income tax deduction."
Actionable Recommendations [15:38 – 26:25]
Mark provides a clear action plan for Chris:
- Maximize Retirement Contributions: Increase 401(k) contributions to 15-20% to take full advantage of retirement savings.
- Optimize 529 Plans: Consolidate existing 529 accounts into the Pennsylvania plan to benefit from state tax deductions.
- Build a Brokerage Account: Allocate a portion of the inheritance to a brokerage account for additional investment flexibility.
- Estate Planning: Urges the completion of essential estate documents, such as wills and durable powers of attorney, to secure their family's future.
Notable Quote:
Mark [19:52]: "You have to have a plan that says, I leave you everything. Honey, you leave me everything."
Final Thoughts and Encouragement [26:26 – 27:32]
As the conversation wraps up, Mark commends Chris for overcoming financial challenges and stresses the importance of diligent financial planning. He encourages listeners to reach out with similar financial queries and reinforces the show's commitment to providing actionable financial advice.
Notable Quote:
Mark [26:25]: "Change your work, change your wealth, change your life."
Key Takeaways:
- Debt Management: Eliminating high-interest debt is crucial before focusing on long-term savings.
- Retirement Prioritization: Maximizing retirement contributions should be a primary financial goal.
- Educational Savings: Utilize state-specific 529 plans to take advantage of tax benefits while saving for college.
- Inheritance Utilization: When receiving a windfall, prioritize bolstering retirement funds and tax-advantaged savings accounts.
- Estate Planning: Ensure that estate documents are in place to protect and provide for your family.
This episode offers a comprehensive guide for families navigating the delicate balance between saving for retirement and funding their children's education. By sharing real-life scenarios and expert advice, Jill Schlesinger and Mark provide listeners with the tools needed to make informed financial decisions.