Planning and saving for retirement can be a daunting notion when you're married and have two incomes coming in, not to mention the support of a partner to help you raise your children. But if you're a single mother, the idea of ever getting to leave the workforce might seem impossible to you.
You're not alone in feeling that way. The good news, though, is that with the right planning, you can map out an eventual workforce escape. Here are some tips that could set you up for a secure retirement -- even if it seems like one may not be in the cards.
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1. Budget your expenses very carefully
When you're single and have to cover your own costs as well as the cost of raising kids, you need to be very mindful of what you're spending. To that end, create a budget that accurately reflects your essential bills and keeps your non-essential costs to a minimum. That could mean cutting back on things like subscriptions and streaming services if they're getting in the way of boosting your 401(k) or individual retirement account (IRA) contributions.
2. Stay out of debt
You may have to take out a mortgage to finance a home purchase, and you might have to pay off your vehicle over time. But other than those two things, you should really aim to steer clear of debt during your working years. If you manage to avoid debt, you'll avoid spending money on interest. That's money that could go into your retirement plan instead.
3. Automate the savings process
It's not always easy to carve out money for retirement savings when you're raising a family on your own. But a good way to stay on track is to put the process on autopilot. Arrange for a certain percentage of your income (ideally, 15% to 20% if that's doable, but less is also OK) to hit your IRA when your paycheck arrives so you're not tempted to spend that money on other things. The good news is that if you have a 401(k) through your employer, your contributions will happen automatically, and you'll simply be left with a smaller paycheck to take home.
4. Have your kids chip in
It's hard to manage household expenses on a single income. And if your kids are older, you shouldn't have to. Encourage your children to get after-school and summer jobs so they can help contribute toward shared expenses like food and rent. That could make it easier for you to fund your nest egg. And this way, your children can also use some of their earnings to contribute to and invest in a Roth IRA from a young age, thereby giving themselves a head start on their own retirement savings.
Planning and saving for retirement can be a major challenge when you're single and are trying to balance home life with a career. But if you follow these tips, you can set yourself on a solid path to a secure retirement -- one that your children will ideally try to emulate once they become adults.
