Please read the previous questions asked at the Agudah convention regarding tuition and answered by Rabbi Shmuel Feurst, if you have not previously read them (Tuition vs. Camp, Tuition vs. Vacation, Tuition vs. Kollel).
Question--What comes first, tuition or retirement funds?
Answer-Obviously, tuition comes first [emphasis added]. While everyone would like to have a retirement fund, accountability for one's children comes first.
Unfortunately, and with all due respect, what is obvious to the Rabbi is not so obvious to me. The Rabbi seems to be of the belief that retirement accounts (401(k)s, IRAs, Roths, etc) are luxuries. I am of the belief that a minimally and/or modestly funded retirement account is not just something nice, but is something necessary and goes hand in hand with being "accountable to one's children."
I think we can all agree that people get old (it happens!), older people can no longer work the same hours as young people, and medical expenses tend to increase in old age. People still need to eat, utility bills still need paid, taxes still need to be paid, etc. If a person has not saved up, guess who will be picking up the tab? Most likely a combination of their children, the community, and the government. Since I tend to view all of the needs to the Jewish community as interconnected, I view the lack of saving (combined with spending and debt financing) as something we all will pick up the tab for eventually.
So here is the deal. A person that starts funding their retirement account at age 25 will only have to put away a small amount of money (say $2000 a year, or $167 a month) to reach a reasonable goal upon retirement. Whereas, a person who decides to forgo funding their retirement account until age 45 will have to put away at least six times more (read: no less than $12,000 a year) to reach the same goal. Wait even longer, and that amount could be twenty fold.
On top of all of that, the matching funds that your company might have provided you are gone forever. Even if you don't fund a certain amount during one pay period, you are out that money forever. Every company has a different vesting and matching policy (5%, 3% up to 6%, etc). But no matter the policy, last I checked a 50% return or even a 100% return is phenomenal. And those matching funds make it easier to reach a reasonable goal.
Now, I'm not sure that if I sat on a tuition committee, that I would be so keen about hearing a family's plans about not paying tuition in lieu of funding their retirement account because the schools needs the money now. Nor would I be too thrilled about hearing their plans about taking a discount so their children can go to camp (which was recommended). And, I'm sure I would not want to hear about how they lack cash flow after "juggl[ing] funds" (i.e. borrow and borrow some more) to pay for weddings and "support" and how they now need a deep reduction because the bank is eating them alive yet they still have kids they need to put through school.
So, what to do? I don't know. Ultimately, if I could force young people to start to put as much as they can into their retirement accounts starting as soon as possible, I would. Because chances are the schools aren't going to make room so they can put $2000 away for retirement even if they make room so they can send their kids to camp.
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