Saving for retirement is important, at any age and life stage. We know this. It’s fairly simple to sock away money here and there as a single full-time employed adult with minimal expenses, or as one half of a married, working couple. But what happens when kids enter the equation? What about when one parent elects to stay home?
As Kelsey Mazzone, a mother of three from Keswick, Ont., can attest to, it becomes slightly more complicated.
“There is less money available to put towards retirement,” Mazzone says. “We have had to cut back in other areas to accommodate for retirement savings, which is important to us.”
Both Mazzone and her husband Louis started their own RRSPs before the age of 20. “Both of our parents are near retirement age and have mentioned they aren't prepared. I think this has scared us and helped us to see how important future planning is,” Mazzone says.
But once they started their family and Mazzone stayed home with their kids, their contributions weren’t able to increase. “Our contributions stayed the same because we had three kids in four years,” Mazzone explains. “Our expenses increased dramatically, leaving us unable to increase our contributions.”
“Planning doesn't change” when one parent stays home with the kids, says Bev Moir, a senior wealth advisor and retirement planning specialist with ScotiaMcLeod. “You still need liquid cash for emergencies and/or short term needs, to pay monthly bills, need to save a portion of every paycheque in order to get ahead for longer term goals such as children's education, paying down mortgage debt, and saving for retirement.
The goals that a single-income household has don't change much … they may just have to adjust to one income by setting more realistic goals or needing more time to achieve them.”
As homeowners and the young parents of three children under the age of six, Mazzone says it’s a challenge to strike a balance between managing the day-to-day costs of caring for the kids and paying for their home with saving for the future.
“We can't go on expensive vacations but we do lots of day trips or road trips. We save money by only buying when things are on sale, etcetera,” Mazzone explains. “We plan to ramp up our savings when our kids are older.”
Doing “without the ‘extras’” is something Moir advises to all single-income households. “For instance, fewer meals out, bring lunch to work, use public transit not taxis — generally being more creative with stretching a dollar.”
For other young parents relying on one income while raising their kids, Mazzone has the following advice:
“Don't stop your contributions — even if it is $100 a month. You can cut back on take-out food or manicures, etcetera; future planning is so important.”