retirement

3 Retirement Savings Tips for the Young and Single

By Chris Hogan

6 Minute Read

If you’re young and single, retirement may seem a lifetime away. After all, you’ve got trails to blaze, friends to make and a world to see.

I get it. Life is short, and you want to use your money to live it to the fullest. But how do you strike the balance between living for today and saving for tomorrow? After all, you don’t want to wake up 30 years from now and realize you can’t retire when you want to.

So do your future self a favor and check out these three things you can do now to retire well later.

1. Avoid the half-million-dollar mistake.

If you’re single, you’re in good company. According to the United States Census Bureau, the number of Americans flying solo has risen steadily in recent decades. In fact, singles now account for approximately 45% of the population.(1)

The shift toward single living has had a surprising influence on retirement savings at large. A Ramsey Research report shows that fewer single people are actively saving for retirement than married couples—49% compared to 65%. In fact, our research shows that one-third of singles have absolutely no retirement savings. That’s not okay!

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Numbers aside, younger singles stand to lose the most by postponing retirement savings. A delay, even by a few years, could cost you hundreds of thousands of dollars. Here’s how:

Let’s say Henry graduates debt-free from college and begins his first job making around $50,000 a year. He’s off to a great start, but he makes a big, but common, mistake. Instead of saving for retirement, Henry opts to spend his income his way—paying for a nice computer, a new car and several trips abroad.

Fast-forward a few years. Henry is now 30, newly married, and starting to think about the future. He begins investing $2,000 a year in his retirement fund. At age 65, he’ll have around $593,000 for retirement. That’s great. But had Henry started investing when he was 24, he could have retired with over $1 million in his account!

As a young adult, you have two huge benefits on your side that older people don’t: time and power of compound growth. The sooner you take advantage of compound growth, the less money you’ll have to spend in the long run to get the retirement you want.

Notice that by getting started early, Henry would have only had to invest $12,000 more to see a $475,000 difference! That’s the power of compound growth!

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2. Ditch the financial folly trio: debt, overspending and going it alone.

According to a 2017 Employee Benefit Research Institute (EBRI) survey, unmarried workers are more than twice as likely as married workers to have less than $1,000 in total household savings and investments.(2)

Nothing steals from your investing potential like debt.

That doesn’t have to be you, so get things moving in the right direction by taking care of some basic personal finance matters first:
  • Ditch the debt. It’s retirement quicksand, so get out of it as soon as you can! If you have a car loan, student loan or consumer debt, pay them off before you start saving for retirement. That’ll free up more of your biggest wealth-building tool—your income!
  • Get real about your spending habits. Now’s a great time to commit to creating a monthly budget to keep track of every dollar you spend. A few bad patterns like consistently overspending—and relying on credit cards to fill the gap—will wreck your ability to stash some cash for retirement.
  • Add a financial friend. Though saving as a single has its advantages, one of the challenges is the lack of accountability when it comes to finances. If it’s hard for you to stay on track with your money, call in reinforcements. A friend or mentor who’s good with money can help hold you accountable.

3. Create a plan.

Retirement investing isn’t as complex or tricky as you might think. The most difficult part of saving for retirement is simply starting. With the right plan in place, you’ll be well on your way to the retirement of your dreams. Start with these retirement savings steps and begin building wealth for your future:

  • Invest 15% of your income. Once you pay off all of your debt and have a three-to six-month emergency fund in place, it’s time to invest like mad. Max out your employer’s 401(k) match, and then begin funding a Roth IRA. If you still haven’t reached your 15% yet, go back to your company’s 401(k) to top off your goal.
  • Don’t be afraid to start small. Can’t swing 15%? That’s okay! Begin with your employer’s 401(k) plan if they offer one, and invest up to the match. Let’s say your company offers a match up to 4% of your income. Your 4% plus your employer’s 4% means you’ve got a total of 8% of your income going toward retirement—that’s a great start!
  • Meet with an investing professional. You don’t have to be rich to get advice from an investing pro. Working with a financial advisor from the get-go means you’ll have a customized retirement roadmap to follow. An advisor can help you understand your investing options and keep you on track for the long haul. In fact, a recent Ramsey Research report showed that Americans who work with a financial professional, compared to those who don’t, are nearly twice as likely to feel confident they’ll have enough money to retire. They’re also more likely to have a six-figure nest egg: 44% of people who partner with a professional have $100,000 or more saved for retirement versus just 9% of those who fly solo. I don’t know about you, but a bigger retirement fund is better—every time!

You don’t have to do this alone.

Planning for retirement doesn’t have to cramp your style. A financial advisor can help you create a plan that gives you freedom to live your life today while you build wealth for tomorrow.

Not sure where to begin? Talk to an investing pro who can help you set up an investing plan that’s just right for you. It’s your future, so take control of it now. Contact a SmartVestor Pro today!

About Chris Hogan

Chris Hogan is the #1 national best-selling author of Retire Inspired: It’s Not an Age. It’s a Financial Number and host of the Retire Inspired Podcast. A popular and dynamic speaker on the topics of personal finance, retirement and leadership, Hogan helps people across the country develop successful strategies to manage their money in both their personal lives and businesses. You can follow Hogan on Twitter and Instagram at @ChrisHogan360 and online at chrishogan360.com or facebook.com/chrishogan360.

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