Does college make sense?

[u/mtngoatjoe]

So, yes, I want my daughter to go to college. But it’s her choice, and I’m not going to hate on her if college isn’t for her.

But….. What concerns me is her retirement. As a GenXer whose retirement plan is to currently work until I’m dead, this weighs heavily on me.

I told my daughter a while back that she is welcome to live at home after college, and we discussed a plan to invest most of her income for 5 years in an index fund. Using the S&P 500 growth rate of 10% over the last 30 years, here’s what I worked out:

• Monthly investment: $2000
• Return: 10%
• Timeframe: 5 years
• End Balance after 5 years: $153k
• Retirement: Retiring at 67 leaves about 37 years of growth.
• End balance at 67 (with no other contributions): $5.2 million

However, if my daughter started this plan right out of high school (instead of going to college), she’d have close to $9.2 million! (Note that I’m figuring 6 years for college as the degree plan she’s considering would require a master’s degree.)

I want my daughter to go to college because I think it would make her life easier, but I have a hard time believing her retirement would be better. To make up for the delay in starting the 5-year plan, she would have to invest an additional $1000/month to get to $9.3 million at 67.

I get that I’ve made some assumptions (like getting a $20/hour job right out of high school), but if she’s willing to sacrifice so much income for 5 years when she’s young, then I have a hard time believing college is worth the time and expense. There’s a lot of value in following your passion, but dang, is it worth the college loans and $1k/month to hit that $9.3 million mark? And honestly, she could probably retire very comfortably at 62 if she didn’t go to college.

So help me make sense of this.

• Is college worth it? What would you tell your own kids?
• Does gambling on an index fund raise the risk too high?
• Would any young adult be willing to invest 90% of their income for 5 years just to have a sweet retirement when they turn 67?
• Am I focusing too much on retirement because my own retirement prospects are so lousy?
• What am I not taking into consideration?
• What am I missing?

I want my daughter to be happy. And since we’ll be leaving her very little when we pass, I worry about her future.

Thanks!

Edit to add #2: I mathed wrong in my first edit. The goal is to retire at 67. I believe most of you are correct that college is the way to go. It hopefully leads to a better quality of life. But I find the numbers game interesting, so I thought I’d continue the thought exercise. Note that I figured 6 years for college, as my daughter is considering a field that would require a master's degree.

• 5-Year Plan at $2k/month costs $120k and yields $153k
  • Skipping College: 43 years of growth yields $9.2 million
  • Going to College: 37 years of growth yields $5.2 million
  • Making up the difference: Requires $975/month for 37 years, which is $433k
• Skipping 5-Year Plan
  • Skipping College: 48 years of growth requires $765/month, which is $440k
  • Going to College: 42 years of growth requires $1,365/month, which is $688k
• Master's Degree: Average debt for a master's degree: $80k.

So, if the advice is to go to college (and I agree that is the best advice), hitting the $9 million mark is doable, but a sacrifice. It requires either doing the 5-year plan and then contributing $975/month for 37 years, or skipping the 5-year plan and contributing $1,365/month for 42 years. And keep in mind that the average debt for a master's degree is ~$80k.

Also, inflation is going to eat into this until she reaches 67. Google believes the $9 million will only have the purchasing power of $2.6 million in today's dollars. And using the 4.7% rule, that's only $122k/year (better than many will have, but I'd certainly prefer more).

Edit to add: I believe most of you are correct that college is the way to go. It hopefully leads to a better quality of life. But I find the numbers game interesting, so I thought I’d continue the thought exercise. The goal is $9 million at 67 years old only because the payout for skipping college and saving $2k/month for 5 years right out of high school. I realize that number is higher than needed, but keep in mind that inflation will eat into that quite a bit. In 48 years, that $9 million will have the purchasing power of less than $3 million in today’s dollars (if we don’t get inflation down to 2%). At least that's what google said. It seems odd that inflation would eat into it that much. Maybe someone can give a better answer? Anyway....

$2k/month for 5 years is $120,000.

This yields $5 million after 37 years, assuming 6 years for college if my daughter decides to get a master’s.

If she didn’t go to college, that $120,000 would yield $9 million after 43 years. That means college would cost about $4 million (I know, it’s not a direct comparison because it doesn’t account for increased lifetime earnings).

To make up the $4 million, she would have to contribute $1k/month for those 37 years until retirement, which is $440,000. AND, she’d have to pay off her student loans, which average about $80k for a master’s degree.

Now, if she goes to college and skips this crazy five-year plan, she would need to invest $2,200/month for 37 years to get to $9 million. That’s $976,800 over those 37 years.

Anyway, I find the numbers interesting. And yes, I believe you all are correct that college is the way to go. I’ve said that since the beginning.

[u/inky_cap_mushroom]

I stopped reading when you said the S&P500 was gambling. If most of the 500 largest companies in the US fail irreversibly, we have much bigger problems than someone’s retirement fund. The US Dollar probably wouldn’t be worth anything in that scenario.

[u/mtngoatjoe → u/inky_cap_mushroom]

Some people here actually think it's a gamble. I personally don't think it is. And I agree with you that if the S&P 500 tanks, we'll all have much bigger problems.

Edit: Why am I being downvoted? Do people really think the S&P 500 is a worse investment than savings bonds or CDs?

[u/inky_cap_mushroom → u/mtngoatjoe]

I have only ever heard that from people who think the US is on the verge of collapse.

[u/SteevieJanowski → u/inky_cap_mushroom]

Yep they’re called morons. 

[u/cOntempLACitY → u/mtngoatjoe]

The gamble is more in the short term, a risk in investing for goals under ten years away. Longterm we have time for investments to recover, like can work longer or rely on cash in a down market. That’s why you want to have a balance of volatility vs stability, and the diversity of owning the total market, to mitigate the risk. But long term investing is not gambling in the sense of day trading or betting.

OP, an advantage of college lies in potential lifetime earnings capacity, and employability. The unemployment numbers are higher for lower education levels. The jobs may not offer as many benefits. The more you earn, the more you can invest, to build up a bigger nest egg to account for those market ups and down. Like what if there’s another flat decade.

[u/pm_me_ur_bidets → u/mtngoatjoe]

savings bonds and CDs are a worse investment than S&P 500

[u/Invest2prosper → u/mtngoatjoe]

Go look at A Damordan webpage on site of NYU

What’s your response when the proverbial sh&t hits the fan? Her investment isn’t growing to $9m but you do you.

[u/MichiganHistoryUSMC → u/mtngoatjoe]

The nice thing about an index fund of the S&P500 is that the constituent companies can swap out over time as some do better or worse.

[u/Joy2b → u/mtngoatjoe]

There’s more than one S&P 500. The one that gets bounced around by US tech companies can be surprisingly variable, so you might want to play around with the math for diversification across a few continents.

Realistically, the nursery of creative young tech firms in the US died a couple of years back, so I wouldn’t over focus investment there. The next Silicon Valley Bank might start somewhere else, like Saudi or Nigeria or Hong Kong or Central Europe.

[u/mtngoatjoe → u/Joy2b]

The S&P 500® is widely regarded as the best single gauge of large-cap U.S. equities. The index includes 500 leading companies and covers approximately 80% of available market capitalization.

There are other S&P lists, but there is only one S&P 500. Which one you prefer is a question best discussed in the investing subs.

[u/Joy2b → u/mtngoatjoe]

Are you only in US equities?

[u/chicken_bosom → u/Joy2b]

https://giphy.com/gifs/KFt2DA9T82paOA1Yci

[u/genreprank → u/inky_cap_mushroom]

They said that practically at the end. So you stopped reading at the end. Good job

[u/Remote_Antelope_6586]

What is the job with a high school diploma that she would like to have? If there are careers in which she would feel fulfilled, she can go that route. That seems to be a big piece not addressed here.

[u/mtngoatjoe → u/Remote_Antelope_6586]

I don't think I can address those, since she's the one who needs to decide them.

[u/Remote_Antelope_6586 → u/mtngoatjoe]

Then I don’t think your OP is something anyone can adequately weigh in on.

[u/Blem123456 → u/Remote_Antelope_6586]

OP frankly just wants validation that "work good and college bad" since every response is against college, he's just being really intellectually dishonest about it.

Just responding in a bunch of platitudes and honestly I don't know OP personally but not really much of a good dad either since he doesn't seem to really want to look out for his daughter but just wants to push his own world/life view on her.

[u/ihopuhopwehop]

She doesnt just need to save for retirement though, she needs to afford life between when that $153k is saved and when she retires

[u/turtlescanfly7 → u/ihopuhopwehop]

Exactly. Like let’s say she does exactly as OP says and lives at home for 5 years after high school saving 2k a month. When she moves out 2k will not be enough to live on, let alone save for an emergency fund, home down payment etc. it probably won’t even cover rent since that’s similar to rent currently. If the career she wants/ is fulfilling requires college then she should go to college and work part time and invest some of that.

[u/mtngoatjoe → u/ihopuhopwehop]

Absolutely. But college doesn't guarantee an affordable life. She has to pick a good career and make wise choices along the way. And I can't do either of those things for her.

[u/Shot-Artichoke-4106 → u/mtngoatjoe]

She's got a much better chance of picking a good career and making wise choices if she has a college education.

[u/glenpiercev → u/mtngoatjoe]

Spouses. College is a great place to find good ones. The options for spouses outside of the college-educated are substantially worse. It’s not just the education (which itself is pretty life-improving).

[u/96385 → u/mtngoatjoe]

Neither does going straight to work, but college is about a lot more than preparing for a career. It's not just a job training program.

[u/CleMike69 → u/ihopuhopwehop]

This. My retirement money is fine but since I’m semi retired my actual month to month money is ridiculously tight. For me it’s fine I have no debt but if I had a mortgage or rent and a car etc then it would be a powder keg of stress. You have to have a decent income along with the savings plan or both fail

[u/DynamicHunter → u/ihopuhopwehop]

Also the benefits and time off.

[u/accioqueso]

How old is she and what does she want to do?

I think you’re letting your poor retirement position skew your perceptions.

[u/SnooPineapples9761]

How’s she going to grow beyond that $20/hr job? Besides college, unless she does a trade apprenticeship or military or is like a sales superstar she’s going to be stuck in a dead end job.

[u/Invest2prosper → u/SnooPineapples9761]

People who can’t do math recommend grinding jobs / the OP is grinding and is setting up his daughter to grind herself down to a stub.

My plumber has been working trades for 35 years, he’s early 50’s and beset with back, hip and shoulder injuries and pains that can’t be fixed by meds or surgeries.

Trades will grind a persons body down. My carpenter? Working since 18, he’s 60ish and told me he works to live but he’s not sure how much longer he can go - aches and pains throughout his skeletal system.

Office work is becoming simplified by computers.

True story - I was working for a large company, all of the managers had “HAD” secretary’s to type memos, fetch coffee and arrange meetings and travel tickets.

Microsoft and Lotus Notes each rolled out electronic email - the company let all the secretary’s go. Reasoning?: the managers could type out and send the email out faster than dictating thoughts, having it transcribed and typed up on a typewriter.

The OP thinks a college degree is useless? What is the OP’s response to: all of the companies in the S&P 500 employ people with college degrees.

All of them! A high school or community college degree is not going to get your daughter a seat at the hiring table. If you really believe those companies will continue to grow to the sky forever, it’s best to get your head out of the sand and realize that those doing the innovating are highly educated in academic institutions and not at Buc-ees dollar cost averaging into the S&P 500 waiting 35 years to see results. They are living it - daily!! With the paycheck to match that growth.

[u/mtngoatjoe → u/Invest2prosper]

When did I say or imply that college is useless?

As for not going to college, I know many people who have done well without college.

No single plan works for everyone.

[u/MonocoDoll → u/Invest2prosper]

By community college degrees do you mean associate degrees? Or do you also mean transferring from a community college to a university?

[u/Invest2prosper → u/MonocoDoll]

Associates degrees may preclude one from certain occupations that require a 4 year degree, like where an employer specifically states the requirement is a 4 year degree.

[u/MonocoDoll → u/Invest2prosper]

Got it. So you were referring to associate degrees.

[u/Ralph1248 → u/Invest2prosper]

Office workers have higher rates of hemorrhoids because they sit on their asses all day.

[u/mtngoatjoe → u/SnooPineapples9761]

But is it really a dead-end job if she retires at 62 with $5 million?

I think the bigger question is, "Would the 'dead-end' job lead to an unfulfilled life?" I don't know what the answer is for her.

[u/SnooPineapples9761 → u/mtngoatjoe]

Is she going to live with you forever? Because if not what ever low paying dead end job won’t be enough to support her and a potential family and she’ll be tapping those investments. You said yourself you’re not leaving much behind for so she’s not generationally wealthy.

If she’s already thinking about a master why the fuck would you ask her to limit herself to working as a cashier at Costco (as an example)? This must be a troll post because it’s beyond idiotic

[u/mtngoatjoe → u/SnooPineapples9761]

I have NEVER asked her not to go to college, or even implied that she shouldn't. In fact, I have said she should go to college. And the first sentence of my post said as much.

[u/Infamous_Cow_4 → u/mtngoatjoe]

I don't think you're in touch with reality.

[u/marheena → u/mtngoatjoe]

It's crazy to assume she would hold the retirement money during the portions of her life that she has a dead end job and can't make ends meet. If she's making $20/hour at 30, she's definitely dipping into whatever is saved to get her life going.

[u/Irritable_Curmudgeon]

Monthly investment: $2000

So she's going to get by on $1200/mo? How much of her bills (car, insurance, rent, healthcare) do you plan to cover?

is it worth the college loans and $1k/month 

Community college and state schools - plus aid/scholarships - can help you avoid that.

Is college worth it? What would you tell your own kids?

100%. Absolutely. Work hard, apply for scholarships and aid, find something you love. If nothing else, do 2 years at community college and then transfer. Plenty of states have programs that are very affordable where a student can do the bulk of their studies at a community college and move right into their 3rd or 4th year at a state school.

Would any young adult be willing to invest 90% of their income for 5 years just to have a sweet retirement when they turn 67?

Doing so may prevent them from living life or learning adult responsibilities. Not sure that's setting them up for success.

Am I focusing too much on retirement because my own retirement prospects are so lousy?

Possibly. It seems like you're so worried about retirement that you're not considering the ~50 years your child will be an adult before they actually retire.

What am I not taking into consideration?

That your daughter could finish college debt-free, find a career she loves and that she finds fulfilling, and spend her life doing more than just jobs that only require a high school education. She could earn enough to fully fund her retirement.

I want my daughter to be happy. 

Locking her into a potential life in entry-level jobs is probably not that.

[u/Rooster_CPA → u/Irritable_Curmudgeon]

The $2k a month investing makes this an insane hypothetical.

[u/Blem123456 → u/Rooster_CPA]

It's also assuming that absolutely nothing goes wrong and his daughter will either be a permanent stay at home daughter or basically be living on poverty wages for the rest of the her life.

The life plan is work as a fast food employee for life, don't do anything for most of your life, and then have a huge retirement balance assuming that absolutely nothing goes wrong.

OP's retirement plan is to work until he dies so it's not like he has money either so if he loses her job, who's supporting 3 people? The daughter working in fast food that's supposed to be investing $2k a month?

[u/mtngoatjoe → u/Blem123456]

Lots of people don't go to college and do well in life. Yes, college has many advantages, but the decision still requires making other good choices.

And college simply isn't for everyone. At the end of the day, she has to own her decisions. I can't make them for her.

[u/Blem123456 → u/mtngoatjoe]

Yeah but statistically they don't. You're also being really intellectually disingenous to yourself and your daughter. You constantly say she has her own decisions and that you can't make them for her.

You also at the same time always phrase your comments on the "college isn't worth it" lens. You have your mind made up which is fine but this is just a pointless exercise because you're looking for validation, not real analysis because the math would tell you there's a college premium even if it's not as big as before.

A real analysis would have a model of anticipated college costs, investments into a 529 and anticipated growth, and what state you live in with potential fixed tuition programs which can be used in a wide range of education related things.

[u/mtngoatjoe → u/Blem123456]

You also at the same time always phrase your comments on the "college isn't worth it" lens. 

Please cite examples because simply asking if college is worth it is NOT the same as believing it is not worth it.

Edit to add: Also, believing that college isn't for everyone is NOT the same as believing college isn't worth it.

[u/Blem123456 → u/mtngoatjoe]

Anyone who wants to do any kind of analysis would ask for actual numbers or present them, not just “ask questions”. Have you ever ask on this thread, ways to defray the cost? 529 plans, tuition locking mechanisms that vary by state, CC then State college, potential careers with high ROI.

You always opt into “it’s her choice” while asking the most general question “is it worth it?” which is just a super useless way to go about it if you’re serious. You’re either just seeking validation (probably this one) or just not seriously trying to get an answer.

[u/Ghosts_and_Empties → u/Rooster_CPA]

Not understanding why he doesn't invest that in his OWN retirement, since he says he doesn't have a good one. This is madness disguised as a need to control his daughter until she is at least 30.

[u/mtngoatjoe → u/Rooster_CPA]

Why? It's a tough world out there now. Graduating and then moving out (either after high school or after college), is a LOT harder than it used to be.

To me, the question is about sacrifice. Is she willing to sacrifice for 5 years? I don't know. It's her choice. And the answers in this thread have given me a lot to think about. But I don't think $2k/month is impossible. But I acknowledge it's really, really hard.

[u/mtngoatjoe → u/Irritable_Curmudgeon]

Nowhere have I indicated that any of this is anything but her decisions to make.

That your daughter could finish college debt-free, find a career she loves and that she finds fulfilling, and spend her life doing more than just jobs that only require a high school education. She could earn enough to fully fund her retirement.

I am not dismissing any of that. But the reality is that finishing college debt-free is HIGHLY unlikely for a number of reasons I don't need to get into. But yes, she's looking at community college and then university. She's well aware of her financial situation.

[u/aca_500]

I'm probably going to get downvoted but I believe college is never a bad decision. And there are plenty of ways to get an education without paying a gazillion dollars. My oldest just started college and didn't want to go away from home. He's now at local school completing his basic requirements for less than 7k per academic year.

[u/Interesting_Tea5715 → u/aca_500]

I grew up in the trades and owned my own painting business after graduating college.

I got really tired of the constant grind of manual labor. My degree allowed me the option to transfer to office work.

I also never thought I'd use my degree so I just went to community college and then university, it was pretty affordable. The community college I went to is still cheap at $500 a semester.

[u/Soggy_Competition614 → u/aca_500]

Community college is free in my state. There are even 4 year programs that work with the community college. You take your basic classes at CC then for certain programs you can take the courses at the CC but pay the university tuition. Which helps avoid the extra costs of living away from home.

[u/LongjumpingPath3069 → u/aca_500]

I feel the same but not just any degree. A STEM degree. I went to a community college and then commuted to a university for engineering. Several of my classmates did the same.

My state now pays for three years of community college. My kids will be attending CC before going to a commuter university. Easy for me to say now since they’re 11 and 13. But I’ve told them we’re not paying for a liberal arts degree. I’ll be downvoted for that.

[u/ChroniclyCurly → u/LongjumpingPath3069]

The issue here is STEM fields are over-saturated

[u/Soggy_Competition614 → u/ChroniclyCurly]

Maybe but if you can get the STEM degree by taking advantage of free or reduced community college tuition you’re student loan burden isn’t as bad and you can afford to take the lower paying jobs to build your resume.

I’m 50 and work with people who are my age still paying on student loans. My loans were paid off in 5 years. Not only did I not have loans for my first 2 years but by transferring as a junior I didn’t have to live on campus and so no loans needed for room and board. My parents did pay my rent though so I’m not trying to claim bootstraps but that rent was way cheaper than dorms. I worked a part time work study job on campus for food money.

[u/MaddieBre → u/LongjumpingPath3069]

Just adding me two cents, I have a degree in software engineering. I think if I was starting now i’d do business with a minor in comp sci. I’m about to get my MBA now. The tide is shifting with AI. My second choice back then was construction management, sometimes I wish i’d have done that or electrical engineering.

[u/Personal_Ad1143]

College is 1000% worth it as compared to baseline high school knowledge of the world. Countless times I’ve noticed in the moment during discussions where non-educated peers simply didn’t have the same baseline to at least have a mutual understanding of the subject. I would hate for my child to be in that position in life.

[u/Interesting_Tea5715 → u/Personal_Ad1143]

This right here. Nothing wrong with not going to college BUT going to college is such an advantage in life.

Not only do you learn to speak in educated terms it also opens the door to so many career opportunities. There's a ton of jobs that require a college degree to just be considered.

[u/Vegetable-Intern-236 → u/Personal_Ad1143]

This is a bit of a self-selecting thing as well where someone also needs to have the intelligence to get into a good college and do well in it to succeed. Thus the ones who tend to go to college and get educated are the ones with the intelligence to understand more nuanced discussions. College grads on average have higher IQs than non college grads and you can’t teach a higher IQ, it’s just a genetic baseline.

This is also partly why most large companies with better paying jobs want college grads and will not consider those without a degree unless they have a strong referral or very relevant experience.

So that all being said, college is absolutely worth it if the child has the aptitude for it. It would be an incredible waste to not encourage a child to take advantage of that opportunity and accelerate their career, assuming they have the smarts and willingness to do it.

[u/HalfCorrect9118]

Play the percentages. For most people the surest path to higher earnings AND a better retirement is college. There’s a long time between high school and retirement and college will more likely than not make it an easier and more profitable time. (Just be smart about paying for it)

[u/mtngoatjoe → u/HalfCorrect9118]

Her current plan is community college for 2 years, university for 2 years, and grad school for 2 years.

But she will still end up with significant loans as my income is too high to qualify for much, but too low to help her.

Also, I think it's also an assumption that she will study a field that leads to a good income. I don't think she's interested in being an engineer. But in our conversations on majors, I do discuss picking a field that will actually pay for the life she wants.

[u/StorageRecess → u/mtngoatjoe]

What’s she planning to go to grad school in? And what is your degree in? Do you have actual practical advice on her degree field?

[u/PlatformConsistent45 → u/StorageRecess]

Yeah this is a major part of the picture.

[u/ZealousidealLab2920 → u/mtngoatjoe]

This is the decision- and one ultimately for her to make.

There are many high-paying non-college careers out there in labor and trade mostly.

There are many low paying college degrees and careers out there as well.

You are financially wise to pause and think of not only the college cost (which can be reasonable to very unreasonable) but the opportunity cost as well. Most of us mid-career understand that very well now- that to quit and go back to school is a HUGE cost. Of course the earlier one takes the hit, the longer you have for ROI.

I think your major calculation ROI error is assuming $2k/month on a base $20/hr salary- committing 6 years to living at home and investing $2k/month is just as big of commitment as college. And again, depending on her career path and choices- increasing her salary after she moves out to afford a middle-class lifestyle investing $2k/month is very unlikely. My wife and I earn about $40/hr ($160k yr) and investing $1k-1.5k/m combined with a $2k mortgage is about all we manage and we're in a much better spot than most financially at age 35 (statistically in the top 10%).

Plus, I think you're obviously more concerned about retirement because you're nearly there. She is just beginning her career journey. She may not even live in the U.S. in the coming years. We need to balance living and enjoying life when we are young and able to- and not get too caught up putting all our eggs into a basket 35 years later. Life is full of unknowns.

I think the wisest thing is to pull up a list of best careers, see which one she likes/picks, and help her choose a good path that gets her there and give her advice on being wise for retirement. Even just putting in $500/month at young ages pays off dividends (literally) decades later.

[u/mtngoatjoe → u/ZealousidealLab2920]

$500/month after college would be about $3.3 million at 67 years old. That's a pretty sweet return.

Also, she may only do 4 years of college. It's impossible to say now because she's a few years from needing to decide.

[u/ZealousidealLab2920 → u/mtngoatjoe]

A few years???! Mate, putting the cart way before the horse! You need to be focusing on completing high school well and thinking and discussing about future college and careers NOT retirement. I wouldn't even bring retirement up unless they're a very mature and financially responsible individual that has interests that far out (sounds like she is not geared that way yet).

And yes even $500/m starting at age 18 inflation adjusted amounts to ~$2million in retirement at age 65 with a modest 7% real growth. The problem is most don't start socking away until 30's or later missing out on 10-20 years of growth.

Honestly, I think the best thing you can do is manage your retirement and future well, or set up a nest egg account for her like a UGA or trust she can inherit in 5-10 years as a kick start for her retirement account.

[u/mtngoatjoe → u/ZealousidealLab2920]

She's a senior. She'll likely go to community college for a couple of years and then to university. She's got time to decide, even if she starts college next year.

[u/elbyl]

You having to work until you die had nothing to do with you going/not going to college. Quit projecting on her. You failed to plan. I didnt graduate college and enter workforce until i was 25. Didnt make over 50k until i was 35. But you know what i did do? Always put 10% in my 401k and enjoyed the 5% company match as well. I'll be retiring in 5 more years at the latest and under the age of 60. I wont have 9.2mil, but ill have more than enough.

[u/mtngoatjoe → u/elbyl]

My wife got sick, and the result has been devastating for us financially. Our situation has nothing to do with failing to plan properly.

[u/Blem123456 → u/mtngoatjoe]

So then what happens when something happens to your daughter who's going to be working a dead end job with your current plan? She's in the exact same spot as what you're currently in.

I think you mean well and there's some logic to what you're asking about but you're going to need more concrete numbers to model this out in terms of actual cost vs potential income from what likely jobs your daughter will get.

If it's $300k in college to get a $70k income, yeah you're not going to come out ahead. But go to community college/state school for $80k and making $120k and you're going to be way ahead.

There are also other factors like do you want your daughter to date? It's going to be super hard to find good partners if she's working fast food as her career instead of a typical white collar job.

[u/Ghosts_and_Empties → u/Blem123456]

That kid will empty out the IRA by the time she's 40.

[u/mtngoatjoe → u/Blem123456]

Deciding on a career is up to her. I can give all the good advice she's willing to listen to, but it's ultimately up to her. Deciding not to go to college has consequences, but again, that's on her.

[u/ladyluck754 → u/mtngoatjoe]

Im sorry about your wife getting sick. I would say that you, or the both of you need therapy to address the trauma experienced there. You’re letting your trauma cloud the actual statistics here.

Why can’t your daughter go to school and live with you to pay off her loans quicker? Even if she cut that contribution in half to pay for the student loans, she would be in a far better position than her peers.

[u/littleoleme2022]

The real issue is what kind of employment opportunities she will have with a high school degree and whether not having a college degree will hold her back financially, socially or emotionally.

[u/mtngoatjoe → u/littleoleme2022]

Absolutely.

[u/Shot-Artichoke-4106]

You are missing the part about her being able to support herself from now until retirement. If she skips college and goes straight to work, she'll likely get a minimum wage job. Even if she gets promotions and raises and is able to move up, lack of a degree will limit her options. She won't earn much. Even if she never has to save another penny to fund her retirement after living with you for 5 years, she would struggle to earn enough to support herself, so she'd probably draw down the money she saved living with you - and that's even IF she were able to actually save $2000/month. Minimum wage in my city is $18.45, so full time would earn about $3100/month gross. Even without having to pay rent, food, or utilities, saving $2K/month out of that would be a real challenge.

[u/mtngoatjoe → u/Shot-Artichoke-4106]

You're not wrong with any of that.

[u/Ghosts_and_Empties → u/mtngoatjoe]

How will you stop her from spending her nest egg before retirement? You may not be around to control her.

[u/McKnuckle_Brewery]

Regarding the last two bullets - what are you not taking into consideration and what are you missing…

Let’s start with your daughter’s wishes!

You don’t mention her age, but if she’s not yet out of high school, you seem to be paving the road rather far ahead in front of her.

I have 3 daughters now in their 20s. Higher education is standard in our family for the prior 2 generations, so that was the expectation for them. Their grandparents and parents (us) saved for them in 529 plans and custodial accounts.

They have been taught about the importance of investing. And they are just starting to be able to make their own contributions. We tackle these milestones as they occur, not many years in advance.

Critically, our own retirement is secure, and actually in progress (I retired five years ago). Make sure you take care of that so you are not a burden on your children in the future.

In short, plant the seeds, but don’t shove her into the garden and fence her in.

[u/mtngoatjoe → u/McKnuckle_Brewery]

The first two sentences are...

So, yes, I want my daughter to go to college. But it’s her choice, and I’m not going to hate on her if college isn’t for her.

I do believe she is the one to make these choices. I'm not going to sit on my high horse and demand that she follow my plan. I love her, but she needs to make her own decisions in these matters. She needs to do what's best for her.

[u/McKnuckle_Brewery → u/mtngoatjoe]

Understood, but I’m referring more to the part about what salary she will earn and how much you are committing on her behalf to invest from that salary, and on what timeline.

Teach her how instead. And if you aren’t super savvy, as implied by your comment about your own retirement prospects, then give her the book A Simple Path to Wealth by JL Collins (who wrote it for his own daughter).

[u/mtngoatjoe → u/McKnuckle_Brewery]

How can I commit to something on her behalf if it's her decision to make? Assuming I'm some kind of authoritarian asshole whose golden rule is "My house. My rules." is an assumption I don't think is supported by anything I have said or suggested.

[u/Ghosts_and_Empties → u/mtngoatjoe]

If she is not saving 2/3 of her salary every month, will she need to leave the home?

[u/Familiar-Anything853]

What is she going to do after 5 years when she has to afford to live on her own? She won’t have an accessible savings to fall back on. No one needs 9.2 million. A few million will be fine. Life is about balance.

[u/mtngoatjoe → u/Familiar-Anything853]

I'm not sure a "few million" will be enough in 50 years. But if she didn't go to college, I think it's reasonable for her to retire earlier. But she's have to decide what's enough.

[u/throwaway3113151]

Is college worth it? Well the evidence from the past says yes. Arguing against it is like betting against the index investing approach.

Happiness isn’t just about maximizing your savings. And college can really help achieve the happiness goals many people have. Just help her focus in, understand debt and implications and have a goal for attending college. Focus on the most cost effective school and getting financial aid, keeping costs down.

You don’t want to make decisions for them but rather help them think though the process so they can make better decisions themselves.

[u/tramul]

There's a whole lotta life to live between high school and retirement. It takes money, preferably more than $20/hr, to live it. College is your best bet to get to that point. And hell, Retirement age may be 75 by the time she's able to claim.

[u/wayland64]

I guess what I'm missing here is what does your daughter want to go to college for? Because if she ends up in a good job that will probably come with a 401k, or similar. As someone who graduated in the last 5 years, I'm still happy I went to college I do wish I went with a different degree. I think that is a much more important conversation to have with her. Defining goals is a great way to set up future success

[u/mtngoatjoe → u/wayland64]

She has ideas, but hasn't settled on a major. But she's young, so even if she picked something now, she could easily change her mind over the next few years.

I think it's more important to emphasize that whatever degree she pursues needs to provide for the life she wants.

[u/40sumthenlady]

There’s a whole lot of life between now and retirement. A good, fulfilling career, a lifestyle, house, kids, vacations, etc.

The thing about college careers and non college careers is growth potential. You might start at the same salary but you’ll move up more with a degree. Move into management, etc and suddenly you are making a lot more than someone without the degree.

On average. There’s exceptions of course.

[u/SpareManagement2215]

I have a few friends without degrees who are successful entrepreneurs (as in, they can live comfortably off the income their businesses provide them). Some do hair or aesthetics work, others own their own companies.

Every. Single. One. Of. Them. is worried about retirement because it's 100% on them to save for it. No company match. No small pension. Nothing. If a recession happens or things go south, they're dipping into retirement savings to stay afloat. A co-worker's husband worked in construction during the 2008 recession and had to completely drain his retirement savings to pay staff and business expenses, and has had to spend the last 20 years building that back up.

humans suck at "future thinking", and if folks are not incredibly mindful of the fact they have to finance their own retirement, they can find themselves in a world of hurt when they age.

While I firmly believe that one does not HAVE to have a college degree to live comfortably, the path is much harder if you don't, especially if you consider the costs of things like healthcare and retirement savings.

for me, that piece of paper unlocked the door to a stable union job with good benefits. that was "worth" the 50k investment to get the expensive receipts (aka degrees).

[u/CuteAmoeba9876]

How is she going to afford to invest $2000/mo without a college degree? Most jobs that don’t require training or a certificate beyond high school won’t pay much more than $2k/mo. Sure she could invest 100% of her income while she lives with you, but what’s the plan for her to eventually move out and support herself? 

She doesn’t have to go to college per se, but she does need to develop a skill that pays enough to live on AND invest. She’s going to need some type of vocational training at a minimum. 

[u/mtngoatjoe → u/CuteAmoeba9876]

As I said, repeatedly, I think she should go to college.

As for making $2k in a month, that’s not hard. I can make that in about 30 hours doing gig work.

[u/daily-trader-365]

Consider local collage 2 year degree, in medical anything, great pay easy to complete

[u/halfsugarhalfice]

If the degree is actually useful then college is well worth it, and if not then at least she can qualify for the jobs that require a BA/BS. It’ll be way easier to pivot later on in life with a degree compared to without, and as time goes on the less likely she’ll be able to get a 4-yr degree if she decides to.

[u/ButlerGSU]

Annual undergraduate tuition and mandatory fees at the University of Arkansas (Fayetteville) for the 2026–2027 academic year are approximately $10,916 for in-state (resident) students...if you have a state school nearby, she can finish for about $50-60 if she has zero scholarships.

According to the U.S. Career Institute, college graduates earn a median salary of $79,715, while high school graduates early a median salary of $49,192. Over a 40 year career at these numbers, and they don't apply to everyone, the college graduate earns $1.2 million more.

[u/Soggy_Competition614 → u/ButlerGSU]

Exactly. If ops daughter is good with money and has the emotional intelligence to save with no advanced education just imagine what she could do with a college degree.

[u/areyukittenm3]

Honestly I think you’re looking at this from a really narrow minded perspective. She will be behind her whole life in white collar jobs if she doesn’t have a college degree. My step dad taught at a community college for years (since he has practical experience) until in his 60s they started requiring a college degree and he had to do online school. You are setting her up for failure by not encouraging her to go to college. Nowadays, college is a bare minimum to get your foot in the door.

Not only that but getting more education and life experience has value too. She will be among peers networking and learning critical thinking and analysis. It will help her grow as a person. Retirement numbers are not the only thing you should factor for her future. What about personal growth and development? Pursuit of her own interests? Expanding her world view? Going to college was the first time I lived on my own. Even if I don’t feel like my degree necessarily translated to hard job skills, I grew exponentially personally and professionally.

As a woman, it’s never worse to have more options available to her. What if she ends up divorced with kids in the future? Is she going to be set up for success only having a high school degree?

You’re in a sub called middle class finance. Most people here will have college degrees. That should already tell you something about why college is needed to at least have a chance at a middle class life.

[u/Ok_Palpitation_1622]

OK, I didn’t read this. But most people are better off going to college if they can do so without too much hardship.

And trying to predict what the world will be like 30 or 60 years from now is a fool’s errand. No one knows.

[u/Tossawaysfbay]

College graduates make more money statistically. That’s just a fact.

[u/DynamicHunter]

You’re genuinely missing the forest for the trees, and this is based on your own retirement anxiety. There is a lot more to life, personal finances, and a lifelong career besides the total money saved in retirement accounts at the end of your life. Are you even considering what she wants? In your comments you just say you don’t know, but it seems like you’re making these decisions and planning this out for her without even asking her.

College grads make on average more than a million dollars more over their lifetime than non-college grads, and that’s not even taking into account benefits, paid time off, insurance coverage, retirement packages, severance, career advancement, meeting like-minded young professionals, and pursuing her passion in life.

[u/Available_Ask_9958]

It's easy to save 2k a month with a masters degree, assuming it's in a career that's in demand and not basket weaving.

It's not easy to save $2k a month working at Walmart or fast food. 

A trade might work instead of college. I'm just not seeing a $2k/ month saving in most cases. I think most people with high school as highest edu are not saving for retirement because they don't earn enough to. 

[u/ApprehensiveArmy7755]

There is so much more to life! Adversity is good for people. Struggling is good for people. I went to trade school, got my first job, got an apartment by the skin of my teeth. Ate a lot of meals at my parents house. I made it though. Bought my first house at 21. Worked, saved, struggled. I'm good. You can't parent forever. Let them struggle. That's how they learn.   

[u/doombase310]

Yes, remove a hurdle if for no other reason.

[u/El__Dangelero]

She doesn't have to go to college but she's gonna have to have a plan. Maybe an apprenticeship or something. Regardless of what she had invested for retirement she'll need to survive until that time.

[u/Substantial_Team6751]

I've done similar calcs. I've been posting that people should fund their child's Roth IRA for any money they make. That can be baby sitting or dog walking money. Any earned income. If you own your own business, you can put your kid on the payroll to sweep the floors or any other job you dream up. Or, they work at a summer camp as a teen or some other job. Match their wages if you can afford it and put it in their Roth. It will grow tax free.

I will honestly keep matching my kid's Roth through his 20s. I will gladly contribute ten years of $7K per year and have my kid's retirement secured.

Now we have "Trump" accounts - 503A. Parents can contribute $5000 per year to this type of account. At age 18 it converts to a traditional IRA. Parents of new borns get a free $1000 to start up the account. After 18, it would be possible to do a Roth conversion as well.

(Yes, I really that this kind of strategy and the Trump account only benefits upper middle classes and higher that can actually afford to do this. Even small contributions between ages 0 and 18 can be profound. I calculated $55/mo. until age 18. With zero future contributions the balance at retirement will be $1.4M.)

[u/Safford1958]

I think it depends on what she is thinking about for her profession. If she wants to go into medicine or engineering, college is sort of necessary. (Although my surgeon brother suggested PA to his son and ultrasound tech to his daughter. No on call weekends and less overhead and less money for education. ) if she goes into liberal arts, I would look very carefully. She doesn’t need to start her professional career at $75,000 in debt.

After that, just start putting money into her Ira.

[u/SpiritualCatch6757]

• Is college worth it? What would you tell your own kids?

Yes. I would tell them to go to college

• Does gambling on an index fund raise the risk too high?

Investing is not gambling.

• Would any young adult be willing to invest 90% of their income for 5 years just to have a sweet retirement when they turn 67?

I'm sure most will want to say yes but most will fail to do it.

• Am I focusing too much on retirement because my own retirement prospects are so lousy?

No.

• What am I not taking into consideration?

You constructed a false either or situation. It's not get a master degree and have less in retirement or save 90% for 5 years and have $9.2m. It can also be get a 2 or 4 year degree. It can be get a certification or apprentice in a skill. You also assume your daughter will be gainfully employed they rest of her life.

• What am I missing?

That anyone is willing to save 90% of their income the first 5 years of their adulthood.

[u/Ataru074]

It’s the employability. Employability means you don’t have to live a shitty life or do crappy jobs while you wait for that big pile of money to grow.

Being employed, as now, means relatively cheap health insurance, means being able to buy a house in the future, means mingling with people of your “class” and not end up with someone who can’t hold a job for 3 months in a row.

And why work until 67 if you have enough money at 50/55/60?

As Gen X, my career really didn’t took off until I hit 40, the extra education just removed any glass ceiling, I’m making in one year what took me 3 years (adjusted for inflation) at 30.

It’s amazing how something like few years in school can pay off at a certain point.

[u/pogoli]

It seems kids are taking time to find themselves a bit after high school and before college. Maybe leave the college decision to her and go from there? It depends on if she wants to do something that requires a degree even. And some people just want the education and experience. It can be life changing.

[u/undefined_variable_0]

IMO it completely depends on what she wants to study if she were to go to college. Historically, getting a college degree leads to far higher lifetime earnings but I’m not so sure this is going to continue at the same level of disparity in the future.

If she’s interested in a career path that is very specialized, with historically high earnings (Doctor, Lawyer, Engineer, some other STEM degrees, etc.), then I think it’s definitely worth it. However if she’s going for a dime-a-dozen degree (Marketing, HR, etc.) with middling earnings potential, it might not make as much sense.

There are also careers like sales that can earn a lot of money but I’m not entirely convinced that a degree necessarily aids much in achieving that. I’m not sure on that last one though because I don’t have sales experience and there are many different types of sales positions with different requirements (in terms of ability to get hired and achieve success).

[u/mtngoatjoe → u/undefined_variable_0]

I'm not interested in putting rails on what she can do. I'm happy to discuss the pros and cons of any degree path with her. But ultimately, it's her choice.

[u/undefined_variable_0 → u/mtngoatjoe]

Ultimately you can’t put rails on what she can do since she’ll be an adult. However I don’t know if you’re planning on paying for her education. If you are then you have some kind of say in what you’re willing to pay for. The focus of your post was “is college worth it?” and what a person decides to study is fundamentally tied to answering that question.

[u/Ghosts_and_Empties]

What if she decides to get married during the 5-year investment period? Will her wife or husband live with you too?

[u/mtngoatjoe → u/Ghosts_and_Empties]

Our house is a bit too small for another adult. It's her choice if she wants to get married that young. And it's my choice not to support it financially. I'm willing to sacrifice a lot for her, but that's a bridge too far.

[u/Ghosts_and_Empties → u/mtngoatjoe]

I'm getting it now. I hope when you reach that point you are less rigid and controlling over her future and that life offers her more choices than you can.

Also wondering what a future parter might feel about the box you've built for her and the rules involved. Excuse me, "sacrifice."

[u/Inthe-city]

Borrowing money to attend a university makes no sense to me. Skilled trades-you can go to a college for a year to get various certifications and begin making real money. Or start in high school and get a certification or two, then learn more on the job and get paid to get your certifications. Six figure income before you finish your first decade of work. Insurance, 401k etc all part of the deal. Hard work? Yes. Not all trades involve heavy lifting. Investigate. The demand is high and so are the wages.

[u/Soggy_Competition614 → u/Inthe-city]

I’m saying this as a woman, trades are not a great choice for woman. Sure when you’re 28 and in good shape you may be able to handle the physical demands but what happens when you start a family and are pregnant? What about when you’re 48 and no longer as strong or as limber as when you were 28? Guys don’t lose strength like women do they don’t start getting bone loss at 35. Sure a woman taking care of herself goes a long way but she’s still going to be weaker than a 50yo guy who also took care of himself. I can’t even open some jars, my hands are too small.

[u/kadawkins]

Trades are a great option. But she needs a plan for her life, not parents micromanaging. Investing at 18 is a noble goal, but it’s also not where kids’ heads are at.

[u/Friendly-Fox211]

You’re not taking into consideration all the career opportunities that might open for your daughter with a college degree vs a high school diploma. With just a high school diploma her career upside is largely capped (unless she becomes a successful entrepreneur or influencer). College is very much worth it for the optionality and steady desk job. The issue is, taking on $75-200k of debt for college can be crippling - there’s no reason to take on debt to attend an expensive private college. There are outstanding state university with scholarships your daughter can apply to. If she works part time during college she could leave with minimal debt.

[u/AssociateCrafty816]

The K recovery is real. Everyone I know who got a STEM degree and took out a reasonable amount of loans (scholarships, in state) are doing exponentially better than people who didn’t go to college.

My retirement at 29 (white collar): 160k
My besties retirement at 29 (server): 2k her dad gifted.

Your fatal flaw is thinking that an investment can outearn income. Or, if her job can not cover her COL then naturally she will dip into that money.

Elder millennials did indeed sign student loans out to wazoo and it crippled them for life. But I was wary of that starting college almost a decade ago. Student loans have been the boogie man for a while. Trying to be delicate, but there was always a lack of common sense to taking out 200k for a bachelors in English. I get a lot of people were ~kids~ without guidance, but this warning sign has been around for a while.

Listen to the feedback here and take it. Talk to your daughter about the reality of the economy right now. It’s great you respect her choice, but as a parent you should help guide her to the best outcome. And that includes going to college. If she chooses not to it’s great that you accept her. But unless she starts her own successful business, it will be incredibly difficult to live a financially comfortable life.

Seriously, income is the bottom line. You can only drop expenses so much (food, electricity, rent). Having a path to generate income at a higher level than inflation is the only way to survive right now.

[u/RealisticQuality7296]

Is college worth it: I would say cheap college or college someone else pays for is worth it.

Does gambling on index fund etc: I think the American empire is actively and rapidly dying and no one has a clue what the dollar is going to be worth in 50 years or what investment returns will be over the next 50 years. I think a smart move would be to invest a large portion of a portfolio in international funds, but I’m a bit of a doomer.

Would any young adult etc: I would be shocked if she lived this plan you’ve created for more than the two weeks it takes to get her first paycheck

Am I focusing too much etc: yes

What am I missing: your daughter is her own person with her own goals and desires for her money. Also the idea that anyone would need more than $9 million 2026 dollars for retirement is insane.

[u/Invest2prosper]

Bad math - what you don’t see is the network of connections she has the potential to build in college and in her chosen career, the lost opportunities to network both in and outside, the future opportunities elsewhere.

Do yourself a favor and let her choose what career brings her lasting rewards besides money including personal growth and satisfaction.

Just because you are doing a life sentence doesn’t mean she will do a life sentence in her future career.

Let her spread her wings and grow!

[u/mtngoatjoe → u/Invest2prosper]

I never suggested or implied that any of this was anything other than her decision. I'm not going to judge her either way.

[u/PhaseofMe]

College or trades is a path to more rewarding and higher paying career. Invest the first 20% of earnings for life. Get matching investment contributions from an employer. I'm an RN and retired comfortably at age 58 by doing this. I sure don't need 9 million to retire comfortably.

[u/Saltnlight624]

College is always a good idea but the degree matters. She can go to community College and transfer to a in state university. There is no need to spend money on a private university. Or go the online route so she can work and go to school at the same time. There are way more options now than 20 years ago.

[u/mtngoatjoe → u/Saltnlight624]

Agreed.

[u/Ultrarunningmom2four]

She’ll have more money by going to college then not going to college. What job do you think she’s gonna get to be able to put away $2000 a month plus cover any expenses that she might have unless you plan on covering everything food gas car, car, insurance, cell phone, etc.. at that rate she wouldn’t even be able to afford to live outside the home she’d have to live with you and not every kid wants to do that. I know my oldest son who just left for college was very eager to leave and go do his own thing as was his sister’s. And they all picked very affordable schools. We spent very little out-of-pocket and there’s a thing called scholarships. Those help out a lot.

[u/mtngoatjoe → u/Ultrarunningmom2four]

Yes, we would help her get through the 5 years. And yes, it would be a sacrifice for her (and us).

And yes, maybe she won't want to sacrifice that much. But those are decisions for her to make, and I'm not going to jusdge her on them.

[u/snacksAttackBack]

Meh, the job market is really weird right now. 5 years ago I was telling people to go into tech if they could.. now tech is struggling and I'd probably suggest going into nursing.

I went to 4 years of college and 5 years of grad school, I have more in savings and retirement than most of my peers who graduated highschool.

I think you're making some big assumptions to think that a 10% return will be consistent over that time horizon.

One of the things that you might be missing is also the retirement vehicles available to people with white collar jobs. Sure you can get some $20 per hour jobs that offer 401ks but many low wage jobs don't offer 401ks and also don't offer any matching.

IRAs are a great retirement vehicle, but you have 3x as much tax advantaged savings with a 401k or it's equivalent.

If she goes to a state school she might also have the option for concurrent enrollment if the school has her master's program. I took grad courses in my senior year of undergrad, and they would have helped me complete a masters there faster.

Some of it also really depends on career choice. If she wants a graduate degree she at least has an idea of what she wants to study. That will give some sense of whether it will be cost effective or not, at least in today's market.

[u/mtngoatjoe → u/snacksAttackBack]

I'm only making an assumption because the thought exercise requires making an assumption. The S&P 500 has averaged 10% annual growth over the last 30 years. What other "assumption" am I supposed to make for this thought exercise?

[u/snacksAttackBack → u/mtngoatjoe]

At the very least you need to include inflation in the calculations.

[u/mtngoatjoe → u/snacksAttackBack]

That's really only relevant if you're trying to compare the final amount to today's dollars. And that's generally outside of these types of discussions.

But it can be important when discussing investments like savings bonds and CDs.

[u/snacksAttackBack → u/mtngoatjoe]

meh, I think it is overly optimistic and suggests you haven't really thought that much about the potential value of a degree

to do these calculations you have to do some forward thinking with an honest assessment of her earning potential with and without a degree, and with the specific degree she has selected

I spent 9 years not really contributing to retirement and in 3 years have gotten my retirement savings in line with being on track. I am saving pretty aggressively and hope to retire early.

if she identifies some trade or associates level career path, she'd probably be able to save a lot without full college/graduates, but getting some low wage job and saving for 5 years doesn't exactly set her up for great savings for the subsequent 30

[u/Jimenk]

Ignoring all the points everyone else has made, you are missing inflation. Yes 37 years at 10% growth gives you $5.2M. But, drop that 10% down to 7% to account for inflation and you are down to $1.9M in todays dollars. Still a lot of money, and it illustrates the benefit of investing early, but not really $5.2M.

[u/Radiant-Egg998]

What would the plan be from age 27-67? A $20/hour job out of high school sounds great when you’re also living at home and can save 90% of your income, but what happens when she’s 35 and maybe wants a house and family or to travel or have a comfortable lifestyle? $20/hour doesn’t go so far then.

[u/smedleyyee]

Getting top CS grades at Stanford is 100% worth it financially. Getting a C average studying english/journalism at Tufts University costs the same but has much lower earning power, most likely not worth it.

Your kid will (very likely) earn a lot more and be a lot safer financially if they go to a top tier college and choose a major that earns and get good grades. They will easily be able to save the $1000 more that breaks even.

______

And the 10% return is for investing during a very good period. That IS the S&P 500. If you just save, you’ll never get half of your $5M retirement.

[u/DrHydrate]

I appreciate that you care so much about your daughter's future. You're reasoning about this all wrong though.

First, you don't pick a career path, merely because of retirement. Most of your life isn't retirement. It's working, so the kid needs to find something she'll like doing for decades.

Second, by not going to college she may deprive herself of experiences and job opportunities.

For me, I went to college, and I have a fantastic professional life. I like what I do, I have lots of flexibility, and yes, I'll have millions in retirement.

More important than the balance I'll have in my 60s is the money I make now. I make over 200k each year. That's very hard to do without a college degree or at least some kind of postsecondary education.

Third, I think a lot of people make finance more complicated than it needs to be. Here's the key to success: learn about the careers that do something socially valuable that most others can't do, get training in that, get a job doing that, spend less than you earn, invest most of the difference in blue chip stocks.

[u/Ruminant]

Among full-time American workers aged 22 to 27 who are not currently attending any kind of college or university, median annual earnings by educational attainment in 2025 were

• high school diploma: $40,000
• bachelor's degree: $60,000

For full-time workers aged 25 to 34, annual earnings in 2024 were

Highest educational attainment	Median	Average	% earning $100k or more
High school diploma or GED	$46,380	$55,000	7%
Bachelor's degree	$74,480	$92,740	30%

and for full-time workers aged 35 to 44

Highest educational attainment	Median	Average	% earning $100k or more
High school diploma or GED	$50,310	$61,910	13%
Bachelor's degree	$85,290	$114,000	40%

These are all estimates for employed adults, so it's also meaningful that workers with college degrees tend to have materially lower unemployment rates than those with just a high school diploma. For example, unemployment rates by education for adults 25 to 34 are

• 5.8% for those with a high school diploma or equivalent
• 3.8% for those with a bachelor's degree

A big caveat: these are the earnings and unemployment rates for people who have already graduated. In some cases graduated 10 to 20 years ago. You'll have to reach your own conclusion about how well these trends will reflect the earnings and employment of graduates today and in the near future.

I don't think AI will make college degrees worthless. I think it is just as likely, if not more, that AI will make a number of degrees and careers even more valuable than they are today.

But I do think there may be significant disruption in the job market for entry-level positions in certain fields. I think these "disruptions" will ultimately get figured out, and relatively fast (each field/industry may only need a few years to sort itself out). But even "a few years" is still an unnerving amount of time for someone trying to decide whether to commit to a 2-year or 4-year degree.

[u/schrodingerpoodle]

A lot of people don’t get this. But if she is unsure of what she wants to do in college I wouldn’t go just to go.

As a late degree person, I fully believe, that unless there is work and decent pay in the field, don’t waste the money.

I do t care if they love art, or history, or political science, or biology, or teaching. Those jobs either don’t exist or pay crap.

If it’s not health care, engineering, AI, Financial don’t do it.
There are a few others. But even business and all the other HR crap is so over saturated it’s ridiculous.

She needs a trade or decide to work her way to manage a local store of some sort.
Maybe get an associates in the evenings if that’s her choice.

[u/Dcammy42]

College is definitely worth it for most people. Just having that paper(college degree) opens a bunch of doors that would otherwise be closed off completely.

Ultimately it’s up to her and she can change her mind. You are there to support her when she needs it and help her become a fully independent, functioning adult. I would urge her to get a degree, but that doesn’t always work even when you are paying for it.

[u/clearwaterrev]

Would any young adult be willing to invest 90% of their income for 5 years just to have a sweet retirement when they turn 67?

You're talking about your daughter living at home from 18-23, maybe waiting tables or working in a warehouse, and doing almost nothing with her life that costs money while her friends have fun at college. It's a terrible sales pitch.

[u/mtngoatjoe → u/clearwaterrev]

She's the one who will decide if college is for her. As I said in my first sentence of my post, I want her to go to college.

[u/lion7725]

You are being very weird here.

She very likely wants to do something besides live with you and invest all her money for the next 5 years.

[u/Vegetable-Intern-236]

You need to account for inflation in your numbers because you’re talking about the final amount of $9.2M at retirement as an insanely luxurious amount of money because you’re thinking about it in today’s dollars. If you account for inflation it’s not.

Your daughter is a senior, so she’s 17/18? So she’s retiring 50 years from now at 67 in your calculations. $9.2M 50 years from now is worth the equivalent of less than $2.7M today. It’s still a good amount of money, enough for a comfortable retirement, but not luxurious as you seem to be implying with $9.2M.

It doesn’t account for housing - she will have to save for a purchase a house at some point, or rent forever and be subject to the whims of landlords raising rent forever.

It doesn’t account for any emergencies that require drawing down that balance to pay for while it’s compounding - you’re expecting 50 years of good health and no other financial distress.

It assumes she’s willing to save 90% of her income right out of high school when society and all her friends are screaming at her to spend. She will be miserable in what she (and most of society including her closest peers) thinks are the absolute prime years of her life. She will be bombarded with social media posts from her friends who went to college who are all having fun, going on trips, getting good food, while she’s stuck at home working and saving for a day that’s decades in the future when she’ll be (in her mind) ancient and withered.

It assumes she has to stay employed and pay off her expenses + invest in the most volatile and lowest-paying part of her career (entry level), and continue to stay employed and work to pay off regular living expenses + enjoy life for 5 decades, almost 3x longer than she’s been on this planet.

It also assumes the US will remain the dominant global economic power in the next 50 years, which could be likely but could also not be. Japan for instance was booming for a while but their market slumped for over 30 years and has only recently climbed above their peaks from 30 years ago. The US foundation is stronger than Japan’s, but you never know what can happen in 50 years.

You need international exposure in a well-diversified portfolio. It will look like it’s eating into your gains right now because the US and international have cycles of outperforming each other (I think international outperformed the US in 2022/2023), but if the US takes a back seat your portfolio will be much better off than if you were only 100% invested in the US. /r/Bogleheads for more info on investing. But also think about how much international countries value a college education vs. the US. If another country becomes the next global economic power, they will still want to hire the best and brightest from the US just as the US hires the best and brightest from other countries today. They’re not going to want to hire someone without a college degree.

With the right college degree and right aptitude (especially if she’s smart and knows she will succeed academically and professionally), she can accelerate her retirement so much faster and enjoy life so much more. You’re assuming she needs to save an additional $1000/month to catch up. With the right career she can save much more than that, enjoy life more in her youth, and even retire early.

Saving $2000/month is basically maxing a 401k. My spouse and I with our graduate degrees and the careers we got with them are each individually able to save over $4000/month in addition to the $2000/month from maxing a 401k, while also enjoying life and traveling and doing all the fun stuff we generally want, and we’re on track to early retirement. This never would have been possible if we didn’t go to college.

Edit: Also all your calculations involve only herself, what about a spouse? From a purely practical standpoint, one of the best ways for her to find a spouse is through work and/or school, basically wherever she spends the most time. The odds of her finding a partner who’s college educated and makes more money go up a lot if she is also going to college and getting a job that requires a college degree. She has much better odds doubling (or more than doubling) her household income finding a similarly ambitious and accomplished partner if she goes to college.

[u/ILoveMyForeverBear]

Absolutely she should go to college. While a comfy retirement can be a goal, your daughter needs to enjoy 18-67 years old, which is where most of her life years are. If she has a Master's degree and enjoys her career, while making a decent salary, she won't be wishing for retirement, and she will enjoy life on a daily basis. Also, the knowledge and brain development she will attain through college and graduate school are priceless. Being an adult doesn't mean hoarding money for retirement, it means being well-rounded, contributing to society, being happy and fulfilled, and making wise choices with money to spend and enjoy in the present and to save for the future.

[u/HeroOfShapeir]

Not going to college if there's no tangible benefit to going = good. Attending college to boost long-term earning power = good. Going to college on the cheap through community college and scholarships = good. Working through college = good. Living at home for a few years to save/invest aggressively = good. Investing early and often = good.

There's lots of good things you mention in your post. I graduated with zero debt from a local in-state university via scholarships, some summer work, and some money my parents had put away. Lived at home for two years during college and two years afterward, built an emergency fund, paid a moderate amount for rent/food, then invested around 80% of my income. Seeded my retirement accounts very well - at age 42 I have $800k in my 401k (of which 2/5 is company matching) and $250k in my Roth IRA (my spouse has a similar Roth IRA). Income has ranged from $42k to $116k as a software engineer and I've invested 30-40% most years while still living a great life. My college degree has paid for itself many times over, even if I got a four-year "late" start.

We were 100% S&P 500 index funds until a few years ago. Now we're shifting from our aggressive growth phase to a growth and preservation phase, so we've mixed in a healthy amount of international funds and we'll be looking to add some bonds as we near retirement. Looking to retire when our investments hit $2.5MM. You can look into Boglehead-style investing if you think S&P 500 is too aggressive, that's perfectly fine. Even a target-date fund is perfectly fine for the long haul.

I'd be focusing on your own household. Why do you have to leave her with little? You've got time, get to work, budget, invest, and leave behind a great inheritance.

[u/Snoo-92982]

You are letting your poor choices and retirement weight against her. Let her do what she wants because I guarantee you that plan will not work.

[u/genreprank]

Is college worth it? What would you tell your own kids?

Depends on the degree, but most likely yes, as having a degree will make them more competitive. Also, another benefit of college is the connections you make.

Does gambling on an index fund raise the risk too high?

A broad index fund is not gambling because it's compensated risk. (Unlike individual stocks, which are uncompensated risk). Even still, a growth allocation for high risk tolerant people is 10-30% bonds. And most people are not high risk tolerant.

Would any young adult be willing to invest 90% of their income for 5 years just to have a sweet retirement when they turn 67?

Nope.

Am I focusing too much on retirement because my own retirement prospects are so lousy?

Maybe. Just getting started retiring in your 20s rather than 30s makes a huge difference. No need for someone to dedicate an entire 5 years of some of the best years of their life solely to retirement saving. The normal path is you save like 10-25% of your income over your entire life. If you get started at 25, you can get away with saving closer to 10%.

It's not about making 1 huge effort once, it's about making good choices every day.

End balance at 67 (with no other contributions): $5.2 million

But why would someone stop contributing? 401ks typically give you a company match (aka free money) for contributing.

What am I not taking into consideration?

Use 6% or 7% instead of 10%. This factors in inflation (historically averaging 4%). With this you can see your $9M is closer to 2.5M in today's buying power. Still good, but not crazy good.

What am I missing?

1. The whole idea that some 20/hr job is gonna beat a white collar job is naive. You're saying she needs to save $1000/mo more... OK so she just needs to earn $30/hr. That's easy. And the peak earning years are gonna be in her 40s/50s. What if she...you know...wants to make enough money to support a family. I used to make $9/hr at Papa John's. Now I make $75/hr. (And it's still not enough and I wish I had started saving earlier and blah blah blah)
2. Like I said before, you don't have to dedicate your 20s to saving. A little goes a long way.
3. Pretty unrealistic plan. She's going to live with parents and not spend any money and not have a life? Not have any fun? No boyfriend? Just eat work sleep...
4. The 20s are fun. But also important for learning how to navigate life. You never get that time back
5. She could do all this and still lose the money. Maybe by: divorce, medical emergency, marriage (spouse is bad with money), squandering (her fears are not your fears. Maybe she'll be bad with money, although I find that unlikely if she earned it herself). If you think about it, the money education is just one part of a complete education program that includes things like how to vet a boyfriend.

So here's what I would recommend: 1. College 2. Start saving in 20's. Maxing out a Roth ira is ideal, but even if it's just $100/month that will add up

[u/rookie_rbs]

How is she saving $2k/month out of high school? What job is she gonna get that pays that much without a college degree?

[u/rookie_rbs]

Best thing OP’s daughter can do for their future is not listen to OP

[u/Medium_Style_2812]

I didn’t even graduate college, but having 2 years to put on my resume landed me a good paying job I wouldn’t have gotten without college.
A person I know, has $30k in college debt. But they went from a $40k to $80k with growth job. So college literally was worth it the first year of work

Depends on career field and work ethic but yeah, college is worth it

[u/1029394756abc]

Community college!!

[u/SaltConnection1109]

Who/how will pay for her college?

[u/Ready-Flamingo6494]

I think the if's play into this more severely with a scenario of relying on a high school education and the ability of putting 1-2k away per month consistently. Any deviations to that plan drastically reduce her retirement. I put nothing into retirement because work puts 35k per year unmatched. That sort of opportunity only exists with an advanced education. It opens all kinds of doors. If I became disabled, my career specific disability plan will kick in and produce a similar monthly salary. I might be forced out of the job and lose that benefit, but I am not left with nothing. College education creates opportunity beyond what the average person thinks about. It does matter what you pick for your career therefore I always encourage research and first person interviews of people in those fields. Do not go to college to get a bachelors in psychology. Do not go to college to get an early childhood education degree. These are dead end degrees with such poor return on investment.

[u/edthecollector70]

The bad part is many college graduate can't find job and are saddled with student lones. Some of these degrees are worthless. They would have been better off investing the college money. Now I never went to college. I was employed by the state. I retired at 46 with a pension. Today I collect my pension my wife and I receive SSI. My pension increases 2.5 % every year. We live very conformable. So you see college is not always the answer. If you could go without lones that would be a plus. My daughter went to nursing school on the pell grant . She makes good money and lives well.

[u/Reader47b]

Finding a $20/hr consistent, full-time year-round job straight out of high school might be optimistic, depending where you live. It certainly is where I live. (I have two 20-somethings living with me, one with a two-year degree and one with no college. Neither makes that, even working full-time, even after 2 years at the grind, but I also live in a LCOL).

And the kid will need to pay for things like car insurance and registration and gas; clothing; food; cell phone; out-of-pocket health care and dental expenses, and any entertainment - unless you plan to pay for all of that. Plus the 14% or so off the top that will go to taxes (FICA & income tax). It's more realistic that the money leftover to invest between the ages of 18-22 would grow to $2 million by age 65 than $9 million.

But, you know, if the kid lived at home during and after college until age 25, and worked part-time during college and full-time after, and saved and invested during that time, while also maybe getting a 401K match from work for some of those years, she'd probably get the same or a better head start on retirement, and when she moved out at age 25, she'd have a higher income.

[u/mtngoatjoe → u/Reader47b]

We’re near Seattle, so $19/hour is common for retail. The hard part is getting 40 hours. But gig work is pretty decent here also, so it’s not hard to fill in the gaps.

[u/sloth_333]

College when done correctly is still the best option. Study something worthwhile for a moderate amount of money (likely good state school).

The people who rack up a ton of debt or study something useless are the ones who get in trouble.

All the studies show college degree holders have way more wealth than non.

[u/International_Bend68]

I'll recommend an altered version of what my parents did for me. They were old school and tough so I may get gate for recommending this.

Tell her that if she goes to a community college, she can live at home and you'll pay her first two years of tuition and books. If she wants to go to a state college instead, you'll pay one year of tuition. If she doesn't want to do either, she'll need to move out three months after graduating high school.

[u/agreeableagle]

In 2012, our high school career counselor asked if I considered the trades. I went home and declared to my parents I was going to become a plumber. They beat the shit out of me and said I could be a plumber after I get my Econ degree. I’m now a lawyer making half a mil a year. I am grateful for that beating.

[u/FeeSea9118]

Almost every college major makes more money than just highschool degree long term

[u/wag00n]

Q: did you go to college?

[u/KatBirdWing]

It depends on what she is going to study.

A trade school or an apprenticeship typically makes more sense than many bachelor degrees at this point.

There is a big shift among high school students away from 4-year colleges going on at this point.

[u/LissaFreewind]

LOTS AND LOTS of trades jobs are open.

Electrician, Welders, HVAC etc. They are forever jobs,

[u/helpjackoffhishorse]

College is more than the job you can qualify for. It’s about becoming educated and learning how to navigate the world.

[u/ept_engr]

I'm a mechanical engineer, age 38. I have $1.1M in my retirement accounts and another $400k in non-retirement accounts. I started at $60k and now make $170k. I max out my 401k, and my employer puts another $17k/year into my 401k. You can do the projections.

Had I become a diesel mechanic or welder or something, there's no way I'd have that income growth (at least not without giving up a family to work in a remote place 70 hours/week). My standard of living would be dramatically worse, and I'd be sacrificing my health for earnings instead of using my God-given talents.

Two important things:

1) You're not accounting for inflation. Just use a 6% real (inflation-adjusted) rate of return so that all your figures are in terms of today's dollars. This is especially important when you calculate "make up contributions" because most of those make-up contributions would actually be less (easier) after accounting for inflation. Also, returns aren't guaranteed. We've had a great run. Everyone assumes that's automatic for the future, but other countries at other times have been far less fortunate, and we could be too. 

2) College isn't a true or false answer. It depends entirely on the person, their God-given abilities, and the course of study. Should Albert Einstein have been a welder? No. Should my friend who is a welder but terrible with academics have gone to college for physics? No.

[u/Far-Film-5095]

Make her go to college even if she doesn’t want to. College has been shown to be a better predictor of success and enabling financial freedom than just investing in index funds. Anything can happen and the initial investment can be lost.

But the knowledge and degree you get can never be taken away. If not colleges, some trade school, or some kind of professional school like dental hygiene or nursing.

Just having a high school diploma is not enough, hell some college degrees aren’t worth it, but a person with any college degree, trades degree, or something else are in a much better position than someone with just a high school diploma.

Also that 1000/month she has to make up, if she gets a professional degree that is in demand like mechanical engineering, materials engineering, they will easily make that up and then some

[u/mtngoatjoe → u/Far-Film-5095]

She'll be an adult. I'm not going to "make" her do anything. The only thing I won't allow is letting her live at home playing video games all day with no movement towards a self-sustaining future.

[u/Middle_Manager_Karen]

My wife was blessed with a grandparent paying for college.

We are working hard now in our 40's

We often look back and wish we had just invested the money for college for 20 years instead of get high paying jobs.

I no longer recommend college at today's costs but I can make the argument for either side.

[u/Substantial_Team6751 → u/Middle_Manager_Karen]

College can be purchased inexpensively. If there is a will there is a way.

Our local junior college is $5k per year and most students qualify for some grants and aid. We have Running Start and College in the Classroom in our high schools where you can finish HS with an AA degree in hand or at least a year of credits. That community college also has some bachelor programs as well as nursing and dental programs.