A college cost reality check

Hey Pete,

Do you remember the ING commercials that said, “What’s your number?” Since then I’ve always wondered, what is my retirement number? I have no clue. How do I determine the number? Is there some super secret financial equation that will bring me enlightenment? 

Also, I have twins who are in 7th grade, how do I estimate how much I will need to put them through four years of school? 

I’d appreciate any advice you can give!


Hey Todd,

Great questions.

Since 1978 the cost of college has risen 1,225%. Yeah. There isn’t really an appropriate follow-up to that statistic, huh? Other than to say, there is some good news. Plenty of schools are trying to change this by enacting tuition freezes, meaning your kids would “lock-in” their rate freshman year and continue to pay the same tuition for their remaining four years.

Let’s get into the numbers. We’ll go with the state tuition average of $21,447. Since your kids have five years until they start college we’ll assume a 5% inflation rate. Which brings your grand total of savings needed to $117, 979.00… per kid. Oof. There is no way to soften the blow. College is extremely expensive. I highly recommend scholarships and other alternative methods for paying for school. Student loans don’t solve a problem, they create one.

As for your retirement number, it’s complex. But if you want a simple answer all you have to decide is how you want to live in retirement. What annual amount of take-home pay do you want to have in retirement? Divide this number by .04 and you’ll have the total you’ll need to save for retirement. If you want $100,000 annually, you’ll need to save 2.5 million. It’s a simplistic equation, but it will at least give you a ballpark goal.


(Courtesy of WIBC)

Leave a Reply

Your email address will not be published. Required fields are marked *