One upon a time, the American dream entailed getting a job, getting married, buying a house with a nice white picket fence, and saving up for retirement. All of these goals were part of a bigger vision — to enjoy the golden years without any financial stress. Now, with increasing education costs, many of today's single parents are putting a greater emphasis on saving up for their children's college education rather than their own retirement, a new Allianz study finds.
According to the LoveFamilyMoney study, single parents prioritize college savings over retirement, causing them some stress. The study asked the participants what their motivation was for developing a future financial plan. Forty-five percent of the single-family respondents said that they were "saving for my kids' education," 26% of the "modern" families and 39% of the "traditional" families said the same.
"Single parents are forced to solve the retirement equation by themselves, which places tremendous pressure on their ability to find the right balance between saving for their children's college expenses and saving for their own future," said Allianz Life Vice President of Consumer Insights Katie Libbe. "Because they are on their own, single parents often lack the flexibility to address multiple goals, and therefore tend to have a more narrow focus on their savings priorities."
The full LoveFamilyMoney set of studies polled more than 4,500 Americans and identified six different "modern" family structures: 1) multigenerational Families, where three or more generations lived in the same household. 2) single-parent families, one unmarried adult with a child under 18; 3) same-sex families; 4) blended families, where children from previous relationships are living with their parent and step-parent; 5) older parents with young children families, this includes parents who are 40+ and have a child five years old or younger; 6) boomerang families, with a child 21 to 35 who has left the home and then returned.
(Traditional families were defined as married, heterosexual couples with at least one child. They made up less than 20% of families in the study.)
Study respondents had at least $50,000 average annual income for each category identified. The single-parent cohort averaged nearly $85,000, and only an average of 6% of their income was derived from child support — 64% received no child support at all. This data incorporates both men and women.
