Happy Halloween to all the families celebrating out there this year.
Every parent I meet would step in front of a bus for their kids. So when money gets tight, the first thing to give is usually their own retirement. The 401(k) contribution gets trimmed "just for a few years." The 529 gets the bonus. Retirement becomes the thing they'll catch up on later.
It feels like love. Done this way, it's often the most expensive kind of love there is, and the bill tends to land on the very kids it was meant to protect.
Three ways sacrificing retirement backfires
1. You trade your most powerful dollars for your most flexible goal.
Retirement dollars get two things college dollars can't fully match: decades of compounding and big tax breaks. In a hypothetical example, a parent who pauses $20,000 a year of retirement savings for ten years, from age 40 to 49, could have roughly $760,000 less at 65, assuming a 7% annual return. That's the price of one decade of "just for now."
College is different. It has scholarships, grants, work-study, student loans, cheaper schools and a student who can contribute. Retirement has none of those. There's no financial aid for your retirement.
2. The safety net for college just got smaller for parents too.
Here's the part most parents haven't heard yet. Starting July 1, 2026, federal Parent PLUS loans for new borrowers are capped at $20,000 per year and $65,000 per student total. Before, parents could borrow up to the full cost of attendance. These new loans also no longer qualify for income-driven repayment.
Meanwhile, the published price of a private four-year college is about $60,920 a year for 2025–26, and about $25,850 at an in-state public university.
I don't read this as a reason to panic about college. I read it as a reason to plan for it on purpose, instead of assuming you can borrow your way through it later. That means a realistic college plan, set alongside your retirement plan, not paid for out of it.
3. The bill comes due for your kids.
This is the part that turns a sacrifice into a backfire. When parents reach their late sixties without enough money, the gap usually lands on the next generation. Today, more than half of Americans in their 40s are "sandwiched": they have a parent 65 or older while also raising or supporting their own kids. Sixty-three million Americans are family caregivers, and nearly half report a major financial impact, like taking on debt or stopping saving.
In other words, the retirement you skip to pay for college can become your kids' expense later, right when they're trying to pay for their kids. A 2024 Bankrate survey found that 37% of parents with adult children had already sacrificed their own retirement savings to help them. The cycle is real.
The oxygen-mask rule, updated
You know the instructions on every flight: secure your own oxygen mask before helping others. Not because you matter more than your kids, but because you can't help anyone once you're out of air.
With money, it works the same way. Here's the order I typically walk families through. I call it the Oxygen-Mask Order:
1. Build a cash cushion. Three to six months of expenses, so one bad month doesn't end up on a credit card or in a 401(k) withdrawal. (Hardship withdrawals hit a record in 2025. About 6% of Vanguard participants took one.)
2. Capture every dollar of employer match. It's the closest thing to free money.
3. Fund your own future to a real target. Use your 401(k) (up to $24,500 in 2026), HSA, Roth, and if your plan allows it, the Mega Backdoor Roth. For most high earners, the goal is a savings rate, not a leftover.
4. Then fund college deliberately. A 529 plan grows tax-free for education. Massachusetts lets you deduct up to $2,000 a year of contributions if you're married filing jointly ($1,000 if single).
5. Add flexible money. Brokerage and Roth dollars can pay for college or fund your freedom, depending on how life unfolds.
6. Claim the free money. If your child was born from 2025 through 2028, they may qualify for a $1,000 government deposit into a Trump Account – but a parent must open and claim the account to trigger it.
Notice what's not on the list: pausing your own savings so the 529 can catch up.
"But won't retirement savings hurt our financial aid?"
It's a fair question, and the answer usually surprises people. On the FAFSA, money in qualified retirement accounts like 401(k)s and IRAs isn't counted as an asset at all. A parent-owned 529, by contrast, counts as a parent asset. It's assessed at a modest rate, but it does count.
For many high-earning families, need-based aid may be limited anyway. But if aid is in play for you, a strong retirement balance won't count against it.
What generosity looks like
None of this means doing less for your kids. It means being generous on purpose:
Decide your "college promise" early. For example: "We'll cover the cost of an in-state public school. If you choose something pricier, we'll figure out the gap together." A clear promise beats an open-ended one you quietly fund out of retirement.
Talk to your kids about it, in an age-appropriate way. Kids who understand trade-offs make better college decisions.
Revisit it every year. Raises, bonuses and new babies all change the math.
The most generous thing you can give your children may not be a debt-free degree. It may be the certainty that they'll never have to choose between their own kids' needs and yours.
This is exactly the kind of trade-off we model for families. If you want to run the numbers for your own situation, reach out.
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