| Sargent & Lundy Savings Investment Plan |
| SACRIFICING YOUR FUTURE FOR YOUR KIDS |
The following excerpts are from an article in the March 1998 issue of "Money" magazine. The opinions expressed by the author, Lesley Alderman, may or may not reflect those of the SIP Committee. Sandra Deneault's parenting style sounds pretty familiar: "I've always put my kids first," says the 52-year-old mom. She's up before dawn most mornings doing household chores, holds down three jobs to afford private college for her two older daughters and still finds time to drive her youngest home from high school. "That doesn't leave me with much of a personal life," notes Deneault, who lives in Hyde Park, Mass. But that, really, is the last of her concerns. Because Deneault has channeled so much money into educating her kids, she's sacrificed her own financial security. For all her industriousness and discipline, she is now carrying $57,400 in debt and has just $55,300 in total savings, which is set aside for retirement in a 401(k) account. And she earns just $42,000 a year, most of it from her primary job as a production coordinator for a trade magazine publisher. There's no doubt that an uber-parenting style costs serious money. According to the U.S. Department of Agriculture, Americans will spend an average of $150,000 over 17 years to raise a child born in 1996. The educational extras that Deneault has chosen have raised the tariff even more: around $6,000 a year per child for private parochial high school, for example, and as much as $3,000 for ballet, acting and piano lessons. The bills might have been easier to handle if Deneault had managed her career differently - her salary has been frozen for the past five years - but she has stayed with the same job because it offers flexible hours that allow her to, say, ferry the girls to doctors' appointments or dance practice. These are the tradeoffs of parenthood. And from Deneault's perspective, they have been more than worth it. Still, you can't live on love alone. Deneault's mountain of debt and modest savings have put her in a precarious position. She receives no alimony from her ex-husband, a construction worker, and except for her 401(k) plan has no financial safety net. Now that her youngest is about to head off to college, Deneault is finally beginning to fret about her own future. Her mother provides one sobering reminder of the fate that may await her: At 75, Rose Susman still works at a local nursing home to make ends meet. "My mom should be enjoying her life now," Deneault says wistfully. "I certainly don't want to keep working this hard when I'm her age." "Money" consulted certified financial planners Jane King of Wellesley, Mass. and Robert Steffen of Minneapolis, and career counselor Priscilla Claman, president of Career Strategies in Boston. Here's what they suggest: Don't sacrifice any more of your retirement savings for your kids' education. Deneault has ignored one of the cardinal rules of financial planning: She put college spending ahead of retirement saving. "Students can always borrow or work to pay for college, but no one is going to loan you money to live on when you're 65," says Steffen. Both planners urge her to quit pilfering from her 401(k) and ask her children to pay for more of their college education by taking out additional loans. A good source for this information is the "College Money Handbook" (Peterson's, $26.95). Forget the commissioned sales job, and look for a higher-paying full-time one. Claman suggests that Deneault look for a job in the graphics department of a financial services firm, where she can combine her design and computer skills with her interest in personal finance. Start an emergency fund. Deneault needs to start saving money outside her 401(k) with the goal of accumulating $12,000 for emergencies. She can increase her saving rate once her debts are paid off. That way, she'll start retirement debt-free - and with a cash cushion to fall back on. |
This page updated on 2/23/98