Some older millennials in their early 40s have it even tougher, tackling their own student debt along with retirement savings and RESP contributions

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When Cindy Marques was in high school, she knew precisely what her parents expected from her in terms of paying for university – she would split the cost with them 50/50.

Now a certified financial planner (CFP) and director of financial planning and education at Open Access Ltd., a group retirement benefits provider in Toronto, Ms. Marques is convinced the hours working at Starbucks Corp. and footing half the school bill were worth it. She thinks it was a good middle ground.

“My parents had it right with the 50/50 approach, giving me some skin in the game,” she says. “I took my education seriously because it was coming from my pocket too and I didn’t have any trauma of big debt later.”

And the parents? Their retirement goals stayed intact.

As university costs rise and the economy falters, Ms. Marques’s parents’ plan to pay for only a portion of their daughter’s education bill seems all the more pertinent today, particularly as more Canadians find themselves juggling funding school with their own retirements. These decisions weigh heavily.

In a recent poll from financial planning firm Embark Student Corp., four in five (81 per cent) parents said they believe it’s their duty to help their children pay for their education. Another 52 per cent said they would even go into debt themselves to get the job done.

Yet, some older millennials in their early 40s have it even more difficult, tackling their own student debt along with retirement savings and registered education savings plan (RESP) contributions.

Robin Taub, chartered accountant in Toronto and author of The Wisest Investment: Teaching your Kids to be Responsible, Independent and Money-smart for Life, admits many parents feel under pressure to spread their finances too thinly.

“Being in that middle generation, you’re so sandwiched because you’re trying to save for your own retirement, you’re supporting your parents and trying to help your kids go to university or college. That’s a lot,” she says.

Being ‘financially secure yourself’

It’s important for advisors to sit down with clients and discuss precisely what their main financial goals are; focus on them; then see what’s left over, says Steve Bridge, an advice-only CFP at Money Coaches Canada Inc. in Vancouver. He asks clients to list what’s important to them and what they’re willing to do to meet those goals and still ensure their own financial future is secure.

“One of the best things you can do for your children is to be financially secure yourself,” he says. “Who wants to have to move in with their kids later in life because they ran out of money?”

Of course, the choice to pay for a full education may reflect a cultural norm, with some families expecting to live in a multi-generation home later, but that’s not a given. Besides, Mr. Bridge worries that by funding an entire degree, parents may be setting themselves up for more hardship later.

“Gifting kids money can be risky,” he says. “Is it a handout they’re going to become dependent on? Will they then expect money for a house and to fix that house?”

Teaching kids self-reliance, resilience and being able to take care of themselves financially is a “really good thing,” he adds.

Janet Gray, another advice-only CFP with Money Coaches Canada in Ottawa, puts it even more bluntly.

“Parents should not put their kids’ education ahead of their own retirement,” she says. “You don’t know what’s coming. There’s so much in your future you have no control over.”

Making intentional choices

Ms. Gray says plans to pay for post-secondary education in full can go even more haywire when offspring change majors numerous times and the school years – and bills – pile up. Instead, have clients talk to their children early, not just about financial expectations around post-secondary education, but about their plans for the future. Sure, not every 17-year-old has a career planned out, but parents can help them make intentional choices.

As a family, they can discuss what the child enjoys and then match that passion to careers. Or maybe a trade makes sense if the child likes working with their hands and problem-solving. They don’t necessarily have to get multiple engineering degrees to work in a field they enjoy.

Ms. Gray is also a proponent of taking a gap year, making money for school and even testing the waters by enrolling in a single online course in the major the child is considering.

“You’re not paying the whole tuition. You’re probably paying maybe $500 for one course,” she says, explaining she has heard “horror stories” of clients’ children who have changed majors multiple times because they don’t know what they wanted to do.

“Maybe if they had to work for that money and you negotiated to help out rather than a handout, it would be a different conversation. You wouldn’t have to work until you’re 85,” she says.

Do kids want parents to lose out on retirement?

Heather Fox, CFP with Peacock Sheridan Group in Kelowna, B.C., says only a few of her clients have had to make the tough decision between funding education or retirement because she works primarily with high-net-worth individuals. Still, she can see why it’s important for advisors to get clients to take a hard look at their full financial picture.

Besides, do the children even want their parents to lose out on retirement to put them through school?

“We have to think our kids probably aren’t going to want us to work longer to fund their education, either,” she says. “They will tell you that.”

Ms. Gray lists off other options to pay for school – scholarships, grants, part-time jobs in school, grandparents stepping up and even choosing cheaper universities and less expensive towns, or going to college instead. She likes to run the numbers for clients so they can see the unvarnished truth about how much schooling will cost and how their own time horizon is finite and approaching.

“There are all kinds of ways that kids can get money for their education, but who’s going to help mom and dad retire?” she asks.

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