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Should you save for retirement or your kids' college costs?

Investor mind-sets are starting to change when balancing saving for retirement versus saving for their kids' college education.

With tuition and room and board ranging from about $20,000 (public in-state) to $45,000 (private nonprofit), is it even possible to do both?

"It becomes increasingly possible the more you broaden ways to get college accomplished," said Kevin J. Meehan, certified financial planner and regional president of the Wealth Enhancement Group. "You don't have to spend $75,000 per year."

He suggests savers start determining return on investment on the child's vocational interests. For example, if the child is interested in teaching and all starting salaries are the same, is it worthwhile to go to an expensive school?

financial planning retirement college fund
Jamie Grill | Getty Images

"If kids have no idea what they're interested in, that sounds like a high-risk investment," Meehan said. "Parents should tell them, 'Start testing your interests out at a lower cost.'"

Meehan offers another no-nonsense perspective for parents to consider: Your child's job in going to college is to get a job. Yet if there is no job associated with a major or degree, stop paying and hold the child accountable. It's important to start talking to kids when they're in high school about what parents can afford.

From a strategy standpoint, saving for retirement should generally take precedence over saving for college, and parents should use cash flow to fund college, he said.

Meehan recommends savers accumulate a good pot of money, starting as early as possible, which will compound until retirement, hopefully over decades. Then, when the kids go off to college, redirect their yearly savings allocation to college costs.

Compounding doesn't work as well with college saving, because parents not only have less time to save but will tend to back off risk in the last few years, he said.

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Lazetta Braxton, a CFP and founder and CEO of Financial Fountains, also gives her clients new ways of looking at the saving-for-retirement-versus-college equation.

"Parents have to figure out what's influencing their decisions," she said. "I give them perspective to look at their own student-loan experience, and I ask them, 'Was it worth it? Do you want the same thing for your children? If not, Junior may need to go to community college and may need to work in high school and college."

Braxton advises parents to be "real," even though their kids might be disappointed. They need to level with their children about what they can realistically contribute toward college, and if the kids want something different, they need to figure it out.

"I drive parents to think of themselves first — it's the greatest gift they can give their kids," she added. "Because there's no guarantee the kids will take care of them financially or otherwise in their old age."

"There's no right or wrong approach. It's more a decision made from the heart than from finances." -Rich Colarossi, accredited investment fiduciary with Colarossi & Williams

"I see many people having children much later, so there's less time to save," said Winnie Sun, managing director and founding partner of Sun Group Wealth Partners. "Now you need to start before your children are born, yet most parents are not seriously saving until their kids are in middle school/junior high."

In terms of saving for retirement versus saving for college, she said, "it used to be that you pay the need that comes first, but now it doesn't make sense anymore. There's no way around it."

Parents and children are adjusting their attitudes and behaviors around college expenses, Sun said. She has observed the following trends among her clients:

  • Strongly encouraging kids to go to public colleges.
  • More open to kids staying closer to home.
  • Kids taking more advanced-placement credits in high school and summer.
  • Parents not encouraging graduate school as much as before.
  • More and more kids working while going to college.

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A couple of clients are even saying college is not a necessity for their kids.

The saving-for-retirement-versus-kids'-college dilemma comes down to parenting and family values, said Rich Colarossi, CFP and accredited investment fiduciary with Colarossi & Williams.

"Some parents will say, 'I don't care what it takes — I don't want my child to be in debt,'" he said. "Others say, 'Nobody helped me when I was young. My child will have to find a way.'"

No matter which way they choose, it can set off a vicious cycle, Colarossi added. If the kids graduate in great debt, they may start off life living with their parents. If the parents sacrifice their retirement savings, they may be living with their kids in their older age.

"There's no right or wrong approach," he said. "It's more a decision made from the heart than from finances."

— By Deborah Nason, special to CNBC.com