Every dollar taken from 401(k)s and IRAs to pay for college can mean several dollars less for retirement, due to years of lost investment earnings and compounding. For example, withdrawing $25,000 for college now could result in $80,000 less for retirement in 20 years. Using retirement money for college may also result in taxes, penalties and reduced financial aid in certain situations. Key takeaway: Setting up and contributing to separate accounts for college and retirement can help investors pursue both goals at the same time.