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If you’re a single professional, you have a distinct disadvantage when it comes to saving for retirement. The challenge? Single life can sometimes lead to spending rather than saving. As a result, it can take some time to dig out of money mistakes you made when you were young and single—or even not-so-young and single. No matter your age or how many assets you’ve saved to date, here are some great ways to be sure you stay on track toward your retirement goals:
1. Live within your means.
When you’re single, having a paycheck with few obligations can feel great. Data shows that, as a group, singles tend to spend more on eating out, entertainment, and extras like clothes, salon services, and more. In general, when you don’t have a spouse or family adding to your expenses, it’s easier to feel like you have more to spend than you really do. The answer: Make a budget, stick to it, and review it twice a year. And when that raise comes, readjust your savings goals first—before you readjust your spending habits.
2. Save. Save.
You may be the exception, but most singles tend to save less than their married friends. Without the added responsibilities, the pressure just isn’t there. The best approach to making sure you build your assets over time is to set up automatic savings. Enroll at the maximum level in your company-sponsored retirement plan, but don’t stop there. Set up systematic deductions that go straight to your cash savings and short-duration bond funds for short-term needs, as well as into a mid-term vehicle like a mutual or institutional fund for money you might need in 5-10 years. In 20 years, you’ll be shocked at how much you’ve socked away.
3. Protect your biggest asset: your ability to earn an income.
As a single person, you don’t even have the illusion that you can rely on someone else for support if something happens to you. Disability insurance (DI) is a must, and the cost is minimal. Convertible term life insurance gives you the cost benefit of term insurance with the option to convert to whole life if your health takes a bad turn. No one who has ever had a problem has said, “I spent too much on insurance.”
4. Evaluate—and re-evaluate—your debt.
While younger singles have less debt than other groups, much of that debt is in student loans that you might assume (often wrongly) is “cheap debt.” Whether you have student loans, credit card debt, or anything else, it’s wise to shop around to see if you can consolidate your debt and get a lower rate. Check local credit unions and online banks that often offer lower rates.
5. Keep credit card debt to a minimum.
It’s a given for anyone, but singles need to be wary of overspending on luxuries. And while singles tend to be better about credit cards than their married friends—even those without kids—be sure to maintain a low or no balance.
Saving for retirement is a challenge for everyone, not just singles. Putting a plan in place today can help set you on a path toward a more secure financial future and give you a greater level of confidence knowing that when that paycheck does eventually come to a halt, you have a solid retirement savings at the ready to replace your monthly income and keep your cash flowing.