Parents Struggle with Retirement Savings

New survey shows daily demands interfere with long-term goals.

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Children, while adorable, also strain their parents’ budgets, making it more difficult for them to save for retirement and get out of debt, according to a new survey by TD Ameritrade. The brokerage house found that while 46 percent of Americans without children say being “debt-free” is an essential component of financial success, only 37 percent of those with children say the same thing. That suggests that for many parents, the day-to-day expenses of children make it almost impossible to steer clear of debt altogether, says Diane Young, director of retirement and goal planning for TD Ameritrade.

At the same time, parents reported that having children made it more difficult to save money for retirement. Some 48 percent of female breadwinners and 39 percent of male breadwinners said they have scaled back their own retirement savings in order to put more money towards their children. Households with only one earner face a particularly high risk for falling behind: One in four single-income households said they are far behind on being financially ready for retirement, compared to 17 percent of dual-income households.

That’s why Young recommends saving money while you’re paying off debt, because waiting to save until you’re debt free might mean putting it off indefinitely. “We encourage people to think, ‘I can keep a lid on debt and be more careful, but also make sure I’m starting to save as quickly as possible,’” she says.

Even saving small amounts -- $25 per paycheck, for example – can help get a retirement account going. “It’s beyond true that if you can take out an additional $25 or $100 from your paycheck and put it into an IRA or college savings account, people will be shocked at how much it grows,” adds Young. She suggests making those payments automatic so you don’t count on the funds for daily expenses. And retirement needs to take priority. “There are ways to fund everything else, even college costs, but with retirement, we’re on our own,” she says.

Making this effort well in advance of retirement can help prevent a catastrophe later, such as being dependent on adult children or filing for bankruptcy. “The last thing we want is to be at an older age with debt,” says Young.

TD Ameritrade offers these five additional tips:

  1. Set goals and outline a budget that helps you meet them.
  2. Contribute to your employer-sponsored retirement plan.
  3. Set up your bank account to automatically save a certain amount each month.
  4. Join up with others also interested in saving more to share common challenges and questions.
  5. Make use of online tools, including TD Ameritrade’s Wealth Ruler. 
  6. (Parents also struggle with maintaining their credit scores and staying on budget.)