A Parent's Dilemma: Saving for Their College Tuition vs. Your Retirement

It's heating up in Austin and I'm definitely in summer mode. The girls are practically living in our new inflatable pool (amazing ROI for a $20 purchase), and life is good.Speaking of the kiddos, last month I wrote about college savings options in Texas. One of the questions that comes up again and again for clients with children is how they should be saving for college. For many, paying for college is a huge priority, and understandably so. But what happens if those tuition bills jeopardize your retirement plan?Not surprisingly, some of the conventional wisdom on this topic is overly simplistic. It goes something like this: "Are you terrified by the student debt epidemic? Do you want to ensure your children won't have to live in your basement to pay off their mountain of student debt? If so, then make sure you take on as much of the financial burden as possible. You'll feel like a great parent and your kids will be on the road to happiness."For some people, this plan is just fine. But it only works if you already have your retirement savings well underway. Paying for college is a wonderful gift to your kids. But an even better gift is not asking them for financial support when you are retired.In the perfect scenario, you'll have plenty of money to retire AND plenty of money for four (or five) years of college. But if this doesn't sound like your financial reality -- and it isn't for many American investors -- then it may be worth thinking about how much of your savings should be allocated to college accounts and how much should be allocated to retirement.This can be complicated. You'll need to think about all the usual details relevant to retirement questions -- your current & projected income, target retirement age, annual family expenses, etc. -- and then consider when tuition bills will hit: In your forties? Fifties? Sixties? What you want to avoid is spending most (or all) of your savings on college and then having to start saving for your own retirement later in life.Here's an option I often discuss with clients: Instead of paying for college when the tuition bills arrive, take out loans to pay the tuition and then help pay off the loans AFTER you reach retirement age (59 1/2, according to the IRS). If you can look at your retirement accounts at that time and feel like you have enough, then you can make withdrawals and gift any extra money to your kids to help them pay off student loans. You'll be giving from a position of financial strength, and that's always a good position to be in.Think of it like this: When you're on a plane, the airline says you're supposed to put your own oxygen mask on before helping your kids with theirs. Maybe it's OK to prioritize your own retirement over other important financial goals, even your kids' college.