How you could use $500K in savings to pay for kids’ college, help family and still have enough to retire

With a recession looming and costs of essentials like housing and food continuing to rise and stay high, many middle-aged Americans are finding that finances are tight not just for themselves, but for their aging parents, too.

According to a 2025 survey from LendingTree, almost 1 in 4 Americans (28%) currently give money or help cover bills for their parents, their partner’s parents or both, while another 23% expect to do so in the future (1).

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According to the U.S. census, around 2.4 million American parents get support from their adult children, with the median amount being $3,749 per year (2).

A significant portion of those grown-up children are married themselves, and this can create tension when spouses disagree on how much to help.

Let’s say you and your spouse are in your early 50s, your two kids are in high school, and you are hoping to pay for college for each of them — and still have enough left over to enjoy your retirement a little over a decade down the line.

With $500K in savings and a good income between you, you can just about manage it. But then along comes a snag: Your spouse’s parents have fallen on financial hard times after your father-in-law needed multiple rounds of cancer treatment.

The low-premium private health insurance plan for seniors they chose — which seemed like a great idea at the time — did not cover all the out-of-network specialists, medications and home care he needed, and now they’ve drained a great deal of their savings and are just barely able to hold onto their home.

Your wife wants you to tap into your nest egg to help her parents cover their monthly expenses while they get back on their feet. A few thousand dollars won’t break the bank, but you’re hesitant to help in case they come to rely on you.

Let’s look at some numbers to decide what you can afford.

Assessing the impact on your nest egg

Your goals as a family are to pay for college for your kids, help keep your in-laws afloat, and retire in your 60s with an adequate nest egg.

Step one is, if there's any way possible, to get some professional advice from a financial advisor or certified financial planner. If you have good credit, you may qualify for loans at a favourable rate, and the expert may advise you to go that route and leave your investments undisturbed so they can keep growing. But assuming you do decide to raid your savings, let's look at how that would work.

First, let’s consider the cost of college.

By far the most economical option is to have your kids live at home and attend a state school or community college. They can still receive a world-class education, but keep living expenses down. With in-state university tuition, books and supplies averaging $10,970 per year (compared to $27,146 per year total costs for those who live on campus), you’re looking at about $88,000 for both kids — likely a bit more by the time they go to college, as costs continue to climb (3).

If they want to pursue education or training further afield, perhaps you can consider agreeing to contribute what you would for the local school and have them make up the difference. It’s still a significant savings compared to their peers going it alone.

Secondly, you want to help your in-laws after the struggles they’ve been through in the last few years. Thankfully, with a paid-off house, they’re not on the hook for rent or mortgage payments.

Taking into account the average operating cost of a home ($1,072 per month according to the American Housing Survey) (4), and the average retirement household spending of $3,098 per month (not including housing) according to the U.S. Consumer Expenditure Surveys (5), your in-laws' living expenses could come out to around $4,170 — likely more, given their ongoing medical costs.

Could you agree to provide a bit of help (say, $500 per month) for the next six months while they get back on an even keel? That would give you time to have all the conversations you need to have before you make some bigger decisions, like whether it’s time to sell their house, tap into their home equity, or look for long-term care.

Read More: Are you richer than you think? 5 clear signs you’re punching way above the average American

Getting through a stressful season

Even setting aside that you are still earning income, contributing to retirement savings, and seeing other assets, like your home and investments, increase in value, after those two big hits to your nest egg, you would be left with $409,000. That hurts, and it’s a significant setback. But guess what? It’s more than three times the median retirement balance of $115,000 for your age group of 45-54.

Although the “magic number” Americans say is necessary for a comfortable retirement is $1.4 million in savings, very few people reach that milestone. Average retirement savings peaks at around $200,000 between age 65 and 74 (6).

Don’t forget that because you have worked your whole life, you will also be eligible for social security when the time comes. If you’re able to delay collecting benefits until your full retirement age or even beyond (up to age 70), your payments will be higher.

Once you have gotten through this very expensive season of life, you can look into making catch-up contributions to your 401(k), which are available to those over 50, and consider seeking out a financial advisor or certified financial planner who can help you make the best decisions for retirement planning.

And finally, remember to celebrate the wins! Your kids’ grandpa has survived cancer, and he’s soon going to see them fly off to college and make their own way in the world.

Whatever you and your wife choose to do, make the decision together, as equal partners. Fidelity’s most recent Couples and Money report revealed that 45% of partners have at least occasional money fights and 25% say money conflicts are their biggest relationship challenge (7).

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Article Sources

We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines.

LendingTree (1); US. Census (2); Education Data (3); Federal Reserve Bank of Minneapolis (4); SmartAsset (5); Federal Reserve (6); Fidelity (7)

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.