Income is finite, but the need to fund both retirement and college is endless. How do you divide and conquer?

By Kate Ashford
Woman saving money for college and retirement in jars
Credit: JGI/Jamie Grill/Getty Images

For parents, college costs can weigh heavily on the mind. In fact, three-quarters of parents would be willing to delay retirement to pay for their kids' college education, according to the most recent Parents, Kids & Money survey from T. Rowe Price. But that may not be the best approach.

"I firmly believe that retirement savings has to always come first," says Jason Dahl, a financial planner in Bethesda, MD. "There's no one out there who is going to make an unsecured loan to help pay for your retirement. As much as a parent wants to help pay for college for the kids, if you're not able to, at least they can get loans."

That said, there's certainly a subset of parents who want to cover their kids' college bills, no matter what. In the struggle of retirement vs. college, how do you balance out equal desires to save? Here are some strategies.

Keep saving for retirement. Don't stop saving for your golden years. Most experts recommend putting at least 10 percent away, although if you're getting started in your 40s or even 50s, you should be saving at least 15 percent a year, if not more. "Ten percent is a good starting point, but the reality is that the vast majority of Americans are underfunded," Dahl says. "So they've really got to try to get themselves up to 15 percent, if not more, in some instances."

Get your employer match. At the very least, if you're struggling to figure out where to put your funds, contribute enough to your 401(k) at work to get an employer match, if there is one. If your company matches half of the first 6 percent you put away, for instance, you're essentially saving 9 percent for retirement overall. It's worth your while.

Start socking away for college ASAP. The sooner you start saving, the less you need to save. That's the power of compounding earnings. "As soon as you're pregnant, as soon as they're born, start putting something in, even if it's $50 or $100 a month," Dahl says. "That can really go a long way in easing your concerns."

Take advantage of 529 plans. This may seem obvious, but only 37 percent of parents are using a 529 plan to save for college, according to Sallie Mae's most recent How America Saves for College report. Your earnings grow tax free as long as you use the money for eligible education expenses, and in some states, you can get an income tax break for contributing. (Check to see if yours does.)

Tell family you'd love some 529 help. Instead of showering your little ones with copious gifts each birthday and holiday, ask grandparents—and perhaps even aunts and uncles—if they'd consider using some of their gift budget to put money toward college. Most relatives are thrilled to be able to do something that's really meaningful for your children.

Save to a Roth IRA. If you're eligible for a Roth account, max it out each year. The advantage here is that you can use this money for retirement or educational expenses, so you don't necessarily have to make a choice right now. If your college costs are lower than you expect because you're raising a child genius who scores a full scholarship, you can put it all toward retirement. (And congratulations.)