Why it's a mistake to put your kids' college savings ahead of your own retirement

Many parents have the lofty goal to cover the full cost of their children's college education.

A record share of parents in the US — 41% — plan to pony up for their kids' entire higher education bill , up from 37% in 2024, according to new research from Fidelity Investments.

That's great news for the kids. But it's rarely a wise move for their parents.

"Unless parents have fully funded their retirement — meaning that they have already saved all of the money they will need — footing the entire bill for children' s education is rarely the best move and can be detrimental to parents' own future," Liz Windisch, a wealth adviser in Denver, told Yahoo Finance.

The motivation is genuine. Nearly 9 in 10 parents say their own student debt motivates them to help their kids, and more than half say having to pay off their loans delayed them from starting to save for retirement.

But how they plan to come up with the funds to pay their kids' tuition bills is troubling.

Many plan to finance their children's college education by withdrawing from a retirement account. They're also cutting what they're saving for retirement as their children get closer to college.

"While it's noble that parents want to help their children feel more financially comfortable, we don't recommend doing that at the expense of their own financial security," said Cory Latham, Fidelity's managing director of 529 college savings. "Your child can take out a loan to cover college costs, but you can't take out a loan to cover your retirement."

That's the heart of the matter. No measure of generosity and self-sacrifice is worth it — for you or your kids — if you end up unable to support yourself after you stop working.

First, what will those future college bills look like when the time comes?

Average annual college tuition in the United States in 2026 ranges from about $4,000 at community colleges to over $45,000 at private universities, according to the Education Data Initiative. And the annual cost of attendance at more than a dozen colleges is now six figures, after accounting for tuition, fees, room and board, books, transportation, and other incidentals.

Of course, there are many variables, including whether your child enrolls in a public university in the state where you live (which means lower tuition), financial aid such as grants and scholarships, and where they live once classes begin. Living at home can drastically lower room and board expenses.

"Often parents are thinking about their children before themselves, and sometimes that sacrifice can come at a steep cost for their kids," said financial planner Lazetta Rainey Braxton.