Retirement planning is one of the most important aspects of adulthood. If you don’t save for retirement as early as possible, then you risk not being able to retire from your job at all due.
For single parents, planning for retirement might seem even more daunting because you’re playing the role of breadwinner and care provider for your family while trying to plan for your own future all at the same time. It can be exhausting trying to make enough money to meet your family’s needs, let alone have leftover money to put into retirement.
Unless you’re lucky enough to qualify for a pension in the future however, planning for retirement should be one of your biggest priorities, even if you’re only in your late 20s or 30s. To stay on track to meet your retirement goals while single-handedly caring and paying for your dependent(s), consider these three strategies that have been proven effective.
A Single Parent’s Guide to Retirement
Diversify Your Investment Options
When you’re a single parent, you probably don’t have limitless free time to dedicate to learning about investment strategies. So, you should seek out investment options requiring minimal effort. However, this doesn’t mean a human investment advisor is your best option, either.
There are plenty of myths about robo-advisors, but the truth is that investment platforms like Betterment or Wealthfront can be much cheaper and even more effective in comparison to human advisors. Since many of these robo-advising companies operate mostly or entirely online, their overhead costs are lower. These savings are passed along to individual investors in the form of lower account management fees.
If you already invest in an employer-provided 401k plan, then consider diverting some extra money to a Roth IRA, which you can withdraw funds from tax-free upon reaching retirement age.
Take on a Side Hustle
It can be very difficult juggling a job, housework, cooking, errands, and childcare all on your own. However, severely cutting your monthly expenses to free up additional funds for retirement can lower your family’s quality of life in the short-run, so it’s all about balancing your financial situation. Starting a side hustle can be a great way to earn extra income.
Either you could cut your budget or you can increase your income with a side hustle. There’s no perfect solution, but if you already made significant cuts to your budget and you want to maintain your current standard of living, then increasing your income is the way to go.
To avoid missing out on opportunities to spend time with your kids, you might consider running a home business. Or, find an online-based side gig through sites like Fiverr, or even consider hosting guests in your home through Airbnb.
There are dozens of options for single parents to earn more money to supplement their retirement savings. This is an ideal strategy for any parent who wants to increase their incomes without decreasing quality time spent with the kids.
Never Use Your Retirement Funds for Tuition
Saving money for college tuition is challenging for most parents, particularly parents who don’t have a partner, spouse, or other relative financially supporting them while raising a family. One option some parents consider when they don’t have thousands of dollars set aside for tuition is pulling money from their retirement accounts to cover their kids’ tuition and other school-related expenses.
Don’t do this! Using your hard-earned retirement funds to pay for tuition can be extremely detrimental to your retirement planning goals. You may only have a decade or two left to save before you want to retire, while your kids have their whole working lives ahead of them to pay off student loans.
It may seem unfair to ask your kids to pay for a majority of their college expenses, but your retirement nest egg needs to be left alone if you hope to accumulate enough money to retire by your mid-60s or 70s.
Many Americans of all ages struggle with retirement planning and saving, though this can be especially challenging for families relying on a single parent’s income. When the majority of your paychecks go towards rent/mortgage, utilities, car expenses, food, and other supplies for every member of the family, coming up with extra money to divert towards a retirement account may seem next to impossible.
Fortunately, the retirement saving strategies discussed above can help you free up more money for your savings accounts without significantly changing your current budget or living situation. It won’t be easy, but you’ll be in a much better position to retire earlier if you start saving now instead of when your kids grow up and leave home.