The New York Times Feb. 28, 2014 article, “Save for Retirement First, the Children’s Education Second”, applies to other financial goals also.  Two critical financial planning steps are to identify your financial goals and determine the priority of each.  The cost of each goal and when you want to achieve the goal are also needed.

One objective in financial planning is to determine how much is needed to achieve your goals.  Saving is almost always the way to have the funds needed.    The longer you wait to start to save for financial goals, the harder it is to achieve.  That is because more needs to be saved each year.   

The challenge to be able to save for retirement becomes more difficult as the number of goals increase.    You can borrow for some goals.   Borrowing for retirement is generally not an alternative.  Financing goals before retirement may decrease the ability to borrow in the future and increases future cash needs. 

Children’s education, helping a child with the purchase of a home, helping children with their loans could reduce the amounts needed to maintain a comfortable retirement. 

Possibly the expenses can be reduced.   Attending local and in-state colleges are generally less expensive than private colleges.  Having the children take out student loans also reduces the amount the parents will have to pay. 

Contributing less into qualified retirement plans, including IRAs, (Plans) and borrowing from Plans reduces the amount that can be saved for retirement.  Contributing to Plans allows the funds to grow free of annual income tax.  This allows the income and growth to grow faster in Plans.  Borrowing from a Plan reduces the potential return on the amount in the Plan.  If the interest rate charged by the Plan is less than the amount a financial institution would charge, the amount of income in the Plan will be reduced. 

A reserve account for the unexpected and emergencies should be given a very high priority.  Without reserves, these types of expenditures could require the liquidation of investment when their values are low. 

There are unintended consequences of not saving for retirement first.  Your children may need to support their parents in retirement.  A child may need to give up a job to care for a parent if the funds are not available for health care.

Set your priorities for yourself first.  Any excess can be left to your heirs.
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