Guide To Retirement Planning For Single Parents

There is an ever ongoing debate on possibilities, prospects, and planning of retirement for single parents. The debate is so profound that you often tend to think whether a single parent can ever retire. You wonder whether saving is the only way to plan for your future retirement and if that is so then whether you can save for both college needs for your children and your retirement.

Raising children is probably the biggest challenge in life which seems to be even more if you are alone. The most significant problem with single parents is that they get so focused and concerned about providing everything to their kids that they often tend to overlook and ignore their own financial needs and priorities.

There have been a lot of studies conducted on single parents, and all of these show that there is a large number of single parents who put saving for education and college for their kids well ahead of saving for their retirement benefits.

It is, therefore, necessary for solo moms and dads to find the right balance between planning for their kid’s education and building a nest egg. The two questions that haunt me are whether to save for retirement and if so then by how much.

Finding the answer

It is not easy to find an answer to these questions. Often retirement takes a backseat when it comes to kids’ education.

  • According to the studies, more than 45% of single parents opt for saving for their kids’ education over retirement in their long-term financial plans.
  • Moreover, in traditional families, the study found that 39% of single parents with at least one child agreed on kids saving. On the other hand, it is just 26% of the modern families who shared the same view.

Therefore, the study reflects that most of the parents, either single or otherwise, usually find a hard time juggling college and retirement savings with the increased expenses and family pressure. It was found that more than 75% of single parents agreed to the stress they experience trying to save for their child’s college expenses and their retirement. They feel that they will run out of money in retirement.

However, about 50% of the single parents said that they could not possibly save enough.

Problems in decision-making

The primary reason that most single parents find it very difficult to make a decision is that they have to do it all alone. Right from the planning stage to its implementation, it is very hard for a single person to take up the entire responsibility to solve their retirement equation successfully.

It is tremendous pressure on their part and ability to find the perfect balance between saving for their future and their children’s college expenses. There is a constant lack of flexibility to address their multiple goals. This means they have a narrower focus and approach to the savings priorities.

The income gap

Another significant reason that leads to the dilemma in the saving priorities of retirement of single parents is the earning ability. It is substantially less and is almost half that the families where two parents are earning. The income gap is not reduced even if a parent receives any type of child support.

Going by the statistics, retirement and education savings goals are affected in most one-parent households as most single moms and even single dads live much below or at the poverty line.

However, despite this low earning ability, most single parents have a sense of obligation and responsibility toward their child and their education. Most want them to complete their education by not having to run into significant debt. About 45% of single parents feel that it is their responsibility as a parent to ensure that their kids get the perfect start in their life academically, professionally as well as financially so that they do not have to rely on debt relief options time and again offered while venturing into their life in future.

The plan to follow

Despite all such alarming and in a way disheartening stats and figures, it is not the end of the road for single parents. There are a few specific ways to overcome this dilemma and start planning for your as well as your child’s better future. The sets to follow include:

  • Start by knowing all your available options. Considering your retirement savings through your employer, you have access to 401(k) or any similar plan. Chip in the minimum to start with specifically if you are getting a good company match.
  • If you are self-employed or if your company does not have any retirement plan, try setting up an IRA.
  • Focus now on college savings once you have your future secured. There are many different grants scholarships and even student loans on offer for single parents.
  • You can always take the help of a financial advisor for specialized advice to figure out the best possible ways to balance both savings priorities. With proper evaluation, you will come up with proper financial plans. You will be able to stay on the right track to meet your financial situation and savings goals.

A lot of different tools will be used to pair your goals along with the available options to choose the best-suited one for you and your needs. You will know about the guidelines to follow to chalk out a strategic plan, and the best way to plan for your retirement being a single parent is to be diligent, regular, and rigorous. Other steps include:

  • Setting up a household budget
  • Saving and investing routinely
  • Living by a budget and disciplining yourself in your spending
  • Tracking every single income and expense
  • Creating an emergency fund

Taking the help of financial pros while investing and while in trouble is another way to stay on the right track of your saving goals.

Lastly and most importantly, remember that setting a plan is easy and it is easier to forget it. If you are a responsible single parent, you will make it a point to stick to it.

One Comment

  1. For a single parents retirement from the job is not the retirement from the duties regarding there children. And it will be not easy enough when you have an Overlehmed Debt. In this can Debt Consolidation is really important. I am glad to read this article covers each n every information about single parents’ retirement plans. Also, it takes the part in Debt Consolidation which is very necessary for such kind of person. Tips n strategies are very awesome n useful. Thanks for publishing this.

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