Saving for your child's college education and your retirement seem like competing goals—here's how to prioritize

As the cost of college rises each year, many parents are nervous about the how they will pay for their child's education. It can be especially difficult to invest for your kid's college fund when you have competing financial priorities, such as investing for retirement or paying for immediate needs like child care. 

You might also want your kids to take on some of the financial responsibility for their education, but at the same time you don't want them saddled with student loan debt their whole lives. How should parents balance these different priorities? Is it wise to choose your child's college education over building your retirement nest egg?

Select spoke with Mark Kantrowitz, higher education expert and author of How to Appeal for More College Financial Aid about whether parents should prioritize helping their children pay for college or instead focus on investing for their own retirement.

Many personal finance experts use the flight attendant metaphor when talking about whether to prioritize college or retirement savings: If you're on an airplane and an emergency occurs, flight attendants recommend you put on your oxygen mask before you help your child put on theirs. The idea is that parents should prioritize putting money toward their own retirement before they invest for their child's college education.

This seems like a reasonable plan. After all, you can't take out loans for retirement (though there is something called a reverse mortgage that allows people to borrow for retirement), but you can take out loans for college. 

However, Kantrowitz believes that the flight attendant analogy is misused.

"The reality is that these arguments often assume that the debt is swept under the rug [and] that someone other than the parents is going to be paying back that debt," says Kantrowitz. "If you assume that the parent is going to be repaying the parent loans, it is cheaper to save [now]."

If parents are going to be responsible for paying off some or all of their child's student loans in the future, they should prioritize contributing some money to their child's college education fund, even if it means putting less toward their retirement accounts. 

Ultimately, saving now for college can also help you save more money in the log run. Any money that you invest now will earn interest, while any money you borrow in the future you'll have to pay back with interest.

On average, every dollar you borrow for college will end up costing you twice as much, says Kantrowitz. Paying off (or even just paying a portion of) your child's student loans could end up costing you hundreds or thousands of dollars that could have been allocated toward your retirement.

"If the parents aren't planning on repaying their child's student loans, they should help ensure the child limits their student loan borrowing to a reasonable amount that they can afford to repay," says Kantrowitz. "If the total student loan debt at graduation is less than their annual income, the student should be able to repay their student loans in 10 years or less."

For parents who plan on paying off their child's student loans, Kantrowitz recommends this general rule: You should borrow less, for all of your children, than your combined annual income.

For example, if your household's combined annual income is $150,0000, and you have three children, you should not take out more than $150,000 in student loans, in total, for all of your children (assuming they're close in age). By keeping the debt load low, parents should be able to pay off their child's loans in less than 10 years. If parents are closer to retirement (about five years out), they should not take out more than roughly half of their annual income in loans.

Kantrowitz notes that there is one instance where parents absolutely should prioritize their retirement, regardless of whether they plan to pay for their child's education.

"If your employer offers to match your contributions to your retirement plan, you should always maximize the match, as that is free money, especially in terms of the impact on your return on investment. It's a matching dollar for dollar, and that's 100% return on investment right there," says Kantrowitz.

While 529 savings plans are one of the best investing options for parents who want to save for their child's education because of the tax benefits they offer, there is another investment vehicle to consider. Parents who want to prioritize investing for retirement can also use money from their individual retirement accounts (IRA) to help finance their child's college education.

Normally, if you withdraw investment gains from an IRA (either a traditional or a Roth) before you're age 59 and a half, you'll have to pay a 10% penalty fee. (Note: You can withdraw your Roth IRA contributions early without having to pay penalty fees or taxes.)

However, if you withdraw your investment gains from a Roth IRA that's been open for five years or more, you won't have to pay a 10% penalty fee or income tax if you're using the money for qualified higher education expenses.

And for Roth IRAs that have been open for less than five years and traditional IRAs (the 5-year term doesn't apply to traditional IRAs), you won't have to pay a penalty fee, but you may have to pay federal and state income tax for education expenses. Qualified higher education expenses include tuition, fees, books and supplies.

If you're looking for one company that offers you investment accounts for both retirement and college, you might want to consider Wealthfront, which offers 529 savings plans, individual retirement accounts and a robo-advisor investment vehicle.

If, however, you're just looking for a 529 savings plan, most 529 savings plans are state-sponsored. You don't need to be a resident of the state in order to sign up for their 529 savings plan, but you may receive a tax benefit if you're an in-state resident.

Lastly, if you just want a retirement account, there are a number of different companies to choose from such as Charles Schwab, Fidelity and Vanguard. When you're looking for a retirement account, you'll want to look for one with low fees and a variety of different investment options so you can create a diversified portfolio.

When it comes to deciding whether investing for your child's education or retirement is more important, you might be tempted to follow traditional personal finance advice and opt to contribute to your future rather than your kids'. However, that might not be the best option. If you're planning on paying off (some or all of) your child's student loan debt after they graduate, you're actually better of saving for college instead of saving for retirement.

Still, your top priority should be maximizing your employer's 401(k) match because you don't want to leave free money on the table.

Ultimately, it comes down to personal decisions (as it often does with personal finance matter), so consider all your options. Whatever you choose, the sooner you get started the better.