Child education vs Retirement plans

Dreams or financial goals of a middle class Indian family: 1) Buying a house. 2)

Overseas travel 3) Child’s education 4) Child’s marriage 5) Retirement savings.

Books and various financial planning makeovers in magazines/books/websites

suggest so. Unlike other financial goals, retirement planning is a different kind

of goal as in the other financial goals once the goal is met; the goal is unlikely

to recur. But retirement depends of the corpus collected during the earning

years. These days, due to advancement in medical science and general health

awareness, people are living longe

Most of the people are not relying on their children to take care of them. But

should parents dip into their retirement savings to cover the expenses for their

child’s education when the costs have gone up so much?

Private medical colleges charge Rs 20 lakh for the five year course while

engineering courses could cost you Rs 15 lakh for the four year course. If you

looking to send your kid overseas, the cost increases manifold. Rising higher

education costs can make higher child education plans fall short. To bridge any

such unwanted gap between your kid and his higher education should you dip

into the retirement savings or ask your child to take an education loan?

One needs to remember that when one reaches the retirement age, time has

run out to save money. You CAN borrow for college but you CAN’T borrow for

retirement: Once savings are used they are gone forever.

Would kids value your sacrifice or would say “It was your duty!” When you pay

for something yourself, you value that much more than when someone else

pays for you, college education is no different. When one pays for college

education oneself, he would tend to take that education much more seriously.

Employability and its duration are also to be thought about. Research

conducted on higher education in

India estimates that only 5% of college graduates in India are employable.

Various survey have shown that though employers were mostly satisfied with

the graduates’ ability to communicate in English but found them lacking skills

necessary to formulate, analyze and solve real life problems. And even if one

lands a job the fear of “pink slips” is always there. Gone are the days when

people would work throughout their life in same organization and jobs were

secure.

Your child taking an education loan is not a failure of your parental duties or

being selfish on your part. These days one’s financial life is paved with loans-

car loan, home loan or mortgage, personal loan etc. By taking education loan

your child would learn how to repay and build a better credit rating for future.

Parents should take heed. Before you use your retirement savings for child

education think logically, long term and beyond emotion.

[Source: https://www.bajajallianz.com/Corp/child-insurance-plans/child-

insurance-plans.jsp]