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Originally published Sunday, February 25, 2007 at 12:00 AM

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Your retirement nest egg might be more important than your child's college fund

Attention all parents. Quick, choose one: Save for your own retirement, or save for your kid's college education? It's no trick question...

Attention all parents. Quick, choose one: Save for your own retirement, or save for your kid's college education?

It's no trick question. And the collected wisdom of a majority of financial experts may surprise you: Save for your old age first.

"Which comes first and how can I save for both? It sounds selfish to put retirement first, but it's a must," writes author and financial planner Ginger Applegarth. "You owe it to yourself and your children. Forget your own college experiences; it's a different world now."

The compounding effects of fewer jobs with pensions, longer life expectancies and the fact that education inflation has dramatically increased the cost of a degree all make this one a no-brainer. Add to these factors the fact that many parents had kids a bit later — or a lot later — than their folks did. There aren't decades anymore between junior's college-graduation day and retirement.

And once you have fully funded your retirement accounts and still have money to go toward college savings? That's when to consider such college-savings vehicles as Coverdell Education Savings Accounts and 529 accounts. For a chart comparing the pros and cons of these options, go to:

One strategy for those unable to tackle both of these financial Matterhorns but reluctant to ignore the looming tuition bill would be to fully fund retirement accounts — and, if needed, tap them. Money in these accounts doesn't count in tabulating financial aid, thus maximizing your child's shot at grants and loans.

Alert kids that their high-school earnings, birthday and bat-mitzvah money, and so on will be earmarked for college. Consider cheaper state colleges, and realize that a modest student loan won't likely hamper your child for long, what with decades to work after graduation.

"Protect your own financial strength because that's the way to ensure that you'll live an independent retirement without being a burden," Applegarth points out. And that's a lesson your child can bank on.

— Nan Connolly

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