Let us see both these two aspects in detail:

Children's Higher Education

As a parent, you must be aware of the skyrocketing costs of education. If you have been investing in your child's higher education for some time, you are better placed to make your child's dream a reality.

Otherwise, you might be looking at aggressively investing money for your children's higher education. The expenses that you need to plan for go beyond mere tuition fees. As a parent, you might also have to consider the living costs, travel, their enjoyment and other expenses as well.

The amount that you have to accumulate for your children's higher education will depend on your child's preferred course and also whether it is an undergraduate or a postgraduate program.

Now, let us do a basic breakdown of the costs involved in such situations.

The overall costs associated with foreign education can easily be upwards of ?1 crore. The costs of post-graduate technical courses are generally higher than other courses.

If your child's higher education is more than a few years away, then you also have to consider the annual inflation rate of that particular course to arrive at the amount that they need to accumulate.

You can check the inflation rate of the course that your child is considering and use any inflation rate calculator to arrive at the required amount.

For instance, let us assume through an example that the current cost is ? 1 crore and you have 10 years in your hand. Then, considering an overall 12% inflation, you will perhaps need to accumulate around ?3.10 crores.

Equity mutual funds can be one of the investment options if your child's higher education is more than five years away. Otherwise, hybrid mutual funds or debt mutual funds can be a feasible investment option as it seeks to balance stability and returns.

You can set up a Systematic Investment Plan (SIP) to accumulate the required amount. In the case of this above example, considering a 15% return on your investments, you will need to invest ?1.11 lakhs every month for 10 years.

Retirement Planning

Now, let us look at retirement planning.

Accumulating a sufficient retirement corpus is an important financial goal.

The current retirement scene is very different from previous generations.

Earlier parents generally expected their children to take care of their expenses after their retirement. But in the current scenario, with children residing in metro cities or another country, they might be struggling to meet their financial goals and keep up with the increase in the cost of living. In such a scenario, depending on your children's income for post-retirement, expenses might put undue pressure on your children.

How to Aim to Balance Both These Financial Goals:

Let us look at some of the ways through which you can balance both these financial goals:

1. Calculate the amount that you have to save for each of these financial goals

The first step would be to calculate the amount that you need to accumulate towards your retirement or for your child's higher education.

While calculating the retirement amount, it is important to even consider inflation especially inflation of healthcare expenses.

You can use a retirement planning calculator to calculate the estimated amount of money that you need to accumulate for your retirement based on your expected life expectancy, inflation and current expenses.

Similarly, you need to calculate the amount that you need to save for your children's higher education.

2. Calculate the amount that you need to save every month to achieve it

Once you have calculated the amount that you need to accumulate, the next step would be to calculate the amount that you have to save every month.

This will also help you understand if you have the bandwidth to save the required amount every month.

If not, then you might have to figure out some new ways.

3. Explore ways to save on college and tuition fees

If the amount that you need to save for your child's desired higher education program is beyond your budget, then you can look at other ways to save on college and tuition fees.

Scholarships and loans are two common alternatives. Student loans come with tax-saving initiatives and the entire burden of saving for your child's higher education goal doesn't fall on you.

Moreover, your child can also look at part-time work opportunities to take care of their expenses. If your child is an adult can look at part-time opportunities even before they start their higher education to get familiar with the work environment and other related aspects that come with working for an organization.

4. Retirement is a non-negotiable financial goal

Planning for your child's higher education is okay but that doesn't mean that you can ignore your retirement. Retirement is the only financial goal that does not come without any loans or financing options. Reverse mortgage is available but it comes with several caveats.

You can look at the different ways to increase your contributions towards your retirement.

Setting up a Systematic Investment Plan (SIP) in a mutual fund such as an index fund of your choice with a step-up option can immensely help you to speed up your retirement savings. In the step-up option, you can fix a percentage and your retirement savings will get increased by that certain percentage every year.

Depending on how much time, you have left to retire and your risk tolerance, you can invest in equity funds, hybrid funds and debt funds.

For instance, if you are 35 years old, your current monthly expense is ? 25,000 and you are considering a life expectancy of up to 90 years, you would need ? 3.17 crore for 30 years. We are considering 6% inflation and 7.5% returns from corpus post-retirement.

In this case, you would need to invest ?16,500 per month at an expected return of 12%.

The next suggestion would be not to break your retirement contributions for other financial goals unless it is an emergency. To navigate such a scenario, it is important to save an adequate amount in your emergency fund and have adequate life and health insurance cover so that you don't have to break your retirement kitty for such scenarios.

To plan for your retirement, you can set up a Systematic Withdrawal Plan (SWP) from your investments to your bank account.

Conclusion

Retirement and children's higher education are two important financial goals and both have a role to play. There have been many cases where people have gone all out to fund their kid's education without giving a single thought about their retirement. This is not financially healthy.

It is suggestable to have a balance of these financial goals and devise a financial plan that works for you.

Consult a mutual fund advisor near you to get started.