Saving for College or Retirement

by David D. Holland


“Our son will be going to college in five years. His sisters will follow soon after. Are we doing enough to save for their college educations? And, how do we accomplish that while also saving for our retirement?” – Toni Holland (my wife)


Plan: Even if it didn’t come from my wife, I would still say this is a great question! Toni and I established a college fund for our three kids a long time ago (the grandparents helped as well). In the spousal “delegation of duties”, I had taken on the job of figuring out how much we need to put in the account each month to accumulate enough funds for the children’s college educations. (It is important to put money aside regularly. A delay in contributions would require the monthly deposit to be bigger to account for less time and less earnings.) So, to answer Toni’s question, “Yes, we are right on track!”


Choices: There are a lot of savings options, and even some untraditional methods of funding college education. One of our friends actually re-financed their home to get a lump sum of cash to buy pre-paid plans for their children! Some people leverage the tax-free benefits of 529 plans (no federal income taxes on any gains if the money is used for approved college expenses). Another choice is the UTMA (Uniform Transfer to Minors Act). It is a type of custodial account where the parent controls the money until the child becomes an adult (usually eighteen, but this can vary by state). In the Holland household, our method for saving for college has been regular savings and brokerage accounts because they afford greater flexibility and ongoing control. While these “nonqualified” accounts don’t give us tax breaks, the greater flexibility has been important because, as a fee-based adviser, I earn a percentage for managing my clients’ investment accounts, so the amount I receive can vary.


Retirement: With a clear path laid out for the kids’ college, we are able to focus on investing and personal debt. Wouldn’t it be great to pay off the home mortgage before retirement? As my business continues to grow, not only will I continue to make monthly college contributions, but I’ll also put as much as I can into my 401(k) plan to provide for Toni’s and my retirement years.


Of course, everyone’s situation is different. For parents who aren’t financial planners, yet are facing similar “college vs. retirement” decisions, call me and I’ll help you map out a plan geared to your specific needs and goals!



Have a financial question you'd like answered here? Email:













David D. Holland, a CERTIFIED FINANCIAL PLANNER™ practitioner, hosts a weekday radio show at 9AM on AM1380 Ormond Beach, AM1230 New Smyrna Beach and AM1490 Deland. He has also authored two books in his Confessions of a Financial Planner series. Holland offers investment advice through Holland Advisory Services, Inc., a registered investment adviser in Ormond Beach. He can be contacted at (386) 671-7526. Email your financial questions to