savings

Saving for Retirement as a Single Parent

To do the right thing for your kids, you need to do the right thing for yourself as well. While it's not easy, you can save. Here's how to start.

Saving money is tough work. As a financial adviser for more than 28 years, it seems that no matter how much money people make, they feel they don’t have enough to put any into savings — even people with high discretionary incomes often appear to fall into this mindset.

If it’s tough for even the wealthiest people to save, it may seem impossible if you’re trying to raise children on your own. But I don’t think it is. I think most people can find some money to put away for retirement. And I think that neglecting to save for retirement is one of the biggest financial mistakes you can make. But how to begin when every penny is precious? Here are a few suggestions:

Start small. Save what you can. Even if you put aside just $10 a week, you’re making progress toward a goal. You’re getting into the habit of saving, and you’re helping that money grow.

Think in terms of three buckets. Split your income into three portions. One portion goes into a bucket you can draw from for your family’s immediate needs: food, housing, medical costs, etc. Put money for mid-term goals — like your children’s college education — into a second bucket. And put another share into a third bucket that will support your long-term goals, like retirement. There may be times when you need to put more money in one bucket than another, but strive to always contribute to each bucket.

Take advantage of tax-favored accounts. You could use IRAs or 401(k)s to help grow your retirement savings and save on your current tax bill at the same time. And if you are fortunate enough to work for a company that matches your contributions, it helps to save much as you can. If your employer will match your contributions up to 5%, then it makes sense to find a way to put in 5%. It’s like free money.

Once your kids can contribute to their future, let them. When it comes to saving for college, I believe most children want to participate in the effort. They should, because it’s their cause, and their future. Many people I know, myself included, worked during their college years. My mom could have given me the money I needed for college, but instead she said, “Don’t rely on me for money anytime you want it. I’m not an unlimited source of cash that drops down from the sky — but I am your safety net.” I think my mom’s philosophy about money taught me responsibility, and reaching my goals felt more fulfilling because I had to sacrifice in order to obtain them.

Don’t budget. Commit to saving. After all these years of working with people and their finances, I’ve decided that I don’t believe in budgets. Trying to cut back on things you want to do usually doesn’t work (unless you’re trying to cause family arguments). Instead, I suggest you decide to save a certain amount each month, and then just do it. You'll automatically buy or do less. It’s not easy, but I’ve seen it work time and time again. Somehow, once you’ve made the commitment to save, it’s like the universe conspires to help you succeed.

About the Author

Ken Moraif, CFP®

CEO and Senior Adviser, Retirement Planners of America

Ken Moraif, CFP, is CEO and senior adviser at Retirement Planners of America, a Dallas-based wealth management and investment firm with over $4.3 billion in AUM and serving over 8,000 households (as of May 2019). He is also the host of the radio show "Money Matters with Ken Moraif," which has offered listeners retirement, investing and personal finance advice since 1996.

Most Popular

Your Guide to Roth Conversions
Special Report
Tax Breaks

Your Guide to Roth Conversions

A Kiplinger Special Report
February 25, 2021
Can't Sleep at Night? Consider Getting Checked Out By a Doctor
health insurance

Can't Sleep at Night? Consider Getting Checked Out By a Doctor

Older adults are more likely to suffer from sleep disorders, such as insomnia and sleep apnea. Left untreated these conditions can have dire consequen…
May 26, 2021
Midyear Investing Outlook: Where to Invest Now
Kiplinger's Investing Outlook

Midyear Investing Outlook: Where to Invest Now

After a powerful start, stocks will grind higher in the second half of 2021. But watch out for curveballs.
May 23, 2021

Recommended

Invest in a Roth 401(k) If You Can
401(k)s

Invest in a Roth 401(k) If You Can

Workers of all ages can benefit from stashing away after-tax money now in exchange for tax-free withdrawals in the future.
June 11, 2021
5 Key Considerations as You Craft Your Retirement Plan
retirement planning

5 Key Considerations as You Craft Your Retirement Plan

No retirement plan is complete without covering these five key areas.
June 10, 2021
8 Surprising Ways to Prosper From Annuities
annuities

8 Surprising Ways to Prosper From Annuities

You can use a fixed annuity to do more than just generate retirement income. These insurance contracts can also help you give to charity, leave money …
June 3, 2021
401(k)s: 10 Things You Must Know About These Retirement Savings Plans
401(k)s

401(k)s: 10 Things You Must Know About These Retirement Savings Plans

These accounts can be a great way to save for retirement while giving you a tax break now. But beware of the fees plan providers charge for 401(k)s.
June 1, 2021