Imagine if retirement were financed by scholarships, grants and loans.
You could qualify for a substantial aid package to pay for your senior years. Your stellar job "grades" and career achievements would be rewarded with significant merit aid.
Alas, no such aid exists. Paying for retirement is an expensive obligation that you have to handle on your own.
The one similarity with college is you likely will need to set aside money for many years in order to take care of it.
And if you need to save for your children's college as well as your own retirement, you've got a daunting challenge on your hands.
The cost of a college education continues to rise faster than inflation, at roughly 5 percent per year. The average sticker-price for four years at a private college is now more than $150,000 _ including $38,589 for the 2011-12 school year. Even going to your state's university runs close to half that total at an average $17,131 a year, according to the College Board.
Retirement is far more expensive than that.
How do you balance those important objectives? Here are five considerations to keep top-of-mind as you juggle both:
1. PUT RETIREMENT FIRST.
Student loan debt has risen above $1 trillion and the average student's debt at graduation now exceeds $25,000, according to the Project on Student Debt. Hoping to keep their own kids from being overly burdened, parents often unwisely sink thousands of dollars into their children's education that otherwise would have gone toward their own retirement.
The latest evidence of this largesse came in recent survey results by Ameriprise Financial that showed that only 24 percent of baby boomers were putting away money for their future, down from 44 percent at the end of 2007. Yet the level of support they were providing their children and other family members had not changed.
Paying for college has to take a back seat to retirement, says Kalman Chany, a New York financial aid consultant and author of "Paying for College Without Going Broke."
The real dilemma is whether you'll have enough money left for retirement after repaying your debt, Chany says.
Don't give in to the temptation to pitch in heavily for college without making sure your retirement savings are on track. You may well leave yourself short in the future, especially with retirements now often spanning three decades.
2. START EARLY ON COLLEGE SAVINGS.
It's critical to start saving early for college, especially as tuition costs continue to accelerate.
"People who can save even $25 or $50 a month can amass a decent-sized college account," says Lynn O'Shaughnessy, a college consultant and author of "The College Solution."
Set up a 529 college savings plan to take advantage of the tax-free withdrawals for education costs.
Parents of a baby born today would have to save $385 a month in order to afford housing and tuition at the average state school, according to Kent Smetters, professor at the University of Pennsylvania's Wharton School. If you don't start saving until the child is in middle school, the required monthly savings amount jumps to $780.
3. SET ASIDE 11 TO 15 PERCENT OF PAY FOR RETIREMENT.
There isn't a consensus on exactly how much savings you should have for retirement. It's generally thought you'll need to make anywhere from 70 percent to 85 percent of your pre-retirement income to maintain a similar standard of living in retirement.
To reach that level of financial security, many financial planners say a good general rule of thumb is to focus on saving 11 percent to 15 percent of pay over a 40-year career.
That can sound overwhelming for parents who have house payments and perhaps college debts of their own. But reaching that proportion can come gradually.
A good way for young parents to start is by contributing 3 percent to 401(k) accounts if their employers offer them. Or up to 6 percent if that's what's needed to qualify for the company's free "match" money.
Then whenever you get a raise, put all but 1 percent toward your retirement account, advises Cheryl Krueger, an actuary with Growing Fortunes Financial Partners in Schaumburg, Ill. So if you get a 3 percent raise, bump up your 401(k) contribution by 2 percent.
4. INVOLVE YOUR CHILD IN THE COLLEGE PLANNING PROCESS.
Convey the importance of college to your child early even if you don't tell her about the financial aspects until later.
Carving off part of each allowance for college savings makes clear that the responsibility will be shared. Krueger, for example, requires that 20 percent of her 11-year-old son's allowance go to savings _ half of that for college.
Then in high school you can get into the numbers. Lay out the parameters for a decision, such as telling your son or daughter that you'll pay for the equivalent of four years at a state school but can afford no more. Be aware that it's common for a student to take five or even six years to graduate.
5. WORK AT REDUCING THE COST OF COLLEGE.
Several strategies can enable you to avoid paying full price.
One is to encourage your child to graduate a semester or two early. Taking as many Advanced Placement courses as possible in high school, and perhaps a community college class or two in the summer, could give a student a full year's worth of college credit.
Another is to spend the first year or two at a local community college, an increasingly popular option, before transferring to a four-year college. The average two-year program costs just $2,713 a year.
Applying strategically to colleges also can yield big savings.
Parents typically assume that their state university is the least expensive option, but that's often not the case. Many private colleges offer extremely generous merit aid to students with strong grades and standardized test scores, even if they weren't at the top of their class.
And some states offer reciprocity for students from neighboring states to attend without paying out-of-state tuition costs, which can be triple the price of in-state.
"Some families are willing to just break the bank" for their kids' college education, O'Shaughnessy says. "They shouldn't."
Especially if they want to have a comfortable retirement, too.
Personal Finance Writer Dave Carpenter can be reached at www.twitter.com/scribblerdave
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