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Should Single Parents Save for Retirement or College First?


As a single parent, you may often feel the weight of the world on your shoulders, particularly when it comes to financially providing for your children. Even if you have some breathing room in your budget, you are likely to put your kids first when it comes time to save. This leaves many single parents sacrificing their retirement to help ease the financial burden of paying for college. But is this the correct way to save?

Single Parents Place College Savings As a Higher Priority Than Two-Parent Families

While it might be easy to assume that all parents prioritize helping their kids save for college, statistics show that 45 percent of single parents with a median income of $85,000 include college saving as a top priority in their long-term financial portfolio, compared to only 39 percent of two-parent homes and 26 percent of modern families.

The Downside of the “First Things First” Plan of Action

The mindset seems to be that of “first things first”— get the kids to college, then worry about retirement planning later. While it’s true that your children will head to college before you retire, there are a few flaws in this mindset:

Downside #1: The first flaw is that students have access to grants, scholarships, federal funding and loans to pay for college. These opportunities increase for single-parent households. Students can also work to save for college.

Downside #2: The second flaw is that the most successful retirement plans require time to appreciate. Even an extra $100 a month can have a major impact on your quality of life after retirement. If you scramble in your last 10 or 15 years of employment to close the gap, you may not be able to achieve your retirement goals.

Saving vs. Financial Planning

Whether speaking of single-parent or two-parent homes, one of the most common mistakes I see is that parents “save money” as their financial plan. However, true financial planning requires you to do more than put money in your savings account each paycheck. It is, instead, a thoughtful and strategic plan, where the goal is to maximize your income.

While placing money in the bank will accrue interest, working with a financial planner will put your money to work for you. Financial planners help you improve your monthly budget, assess how much to save, aim for compounding interest for retirement and help you explore all of your options when it comes to education planning.

The School Counselor Shouldn’t Be Your Only Resource

School counselors are excellent resources, but they must not be mistaken for financial planners. They may be able to walk you through the basics of applying for loans, grants and scholarships. However, it is outside of their scope to help you create a financial plan. For example, they may not suggest a private university with a high tuition, which also has ample grants that your student doesn’t have to pay back. Work with a financial expert who specializes in education planning and can truly present you with all available options.

As of 2016, there are approximately 12 million single-parent homes in the U.S., 80 percent of which are led by single mothers. Time and time again, I see dedicated mothers put their children’s needs and dreams above their own, especially when it comes to saving for college. You deserve to have a comfortable retirement and can do so without sacrificing your child’s college tuition. Reach out to me today to discuss responsible planning for both education and retirement.

Linden Oak Wealth Partners offers fee-only financial advising customized for women, in particular, women in transition. Our goal is to create an environment where financial planning is efficient, simplified and easy to understand. We want clients to feel empowered and engaged every step of the way. Please contact us to schedule an initial consultation today.

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