Caregiving roles extend outside of Millennials or Gen Xers—a statement that now rings true with new research from the Society of Actuaries (SOA).
The latest findings surveyed 1,000 workers and retirees between the ages of 25 and 80 who are both saving for retirement and allocating at least $500 towards college savings. The research found that over half of respondents (58%) say they have delayed retirement significantly or moderately because they are allocating money to a college savings fund for family or friends instead. Additionally, two-fifths (41%) of retirement/college savers have used retirement funds to pay for the college education of a relative, even with the risk of a tax penalty for early withdrawals.
Most respondents (92%) are saving for their own children’s college education, while 66% of Baby Boomers are saving for their grandchildren. Several respondents are saving for other family members and/or friends, found the SOA. “The challenge of prioritizing different savings goals, including college for family members, has led to families making difficult choices, such as delaying retirement plans,” said R. Dale Hall, managing director of research for the SOA Research Institute, in a statement. “This consumer survey helps identify the underlying challenges individuals and couples face in balancing multiple financial goals, such as funding college education, providing for unexpected financial needs and planning for a secure retirement.”
Another 63% of respondents in the SOA survey say that having to save for retirement has impacted their role in providing funds for college education. As a result, 40% of all respondents will or have had to take out loans and 16% will or have had to borrow from family or friends to help pay for someone else’s college. Furthermore, 39% of all respondents work longer hours and 26% have taken on additional jobs in response to the dual saving goals, according to the SOA.
Because of the saving pressures from both retirement and college education, the SOA found many college fund beneficiaries have had to compromise. Nearly half of all the college/retirement savers surveyed say their beneficiaries have experienced a medium or large impact on their college plans because of the savers’ dual financial goals, and 40% of respondents report college fund beneficiaries will have to choose a public in-state college over a private or out-of-state college. Thirty-five percent say their collegegoers will have to choose a two-year community college over a four-year institution and 12% report they will postpone going to college altogether.
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