Long-term financial planning for single parents has its challenges. "Losing a job or becoming ill can be more catastrophic as a single parent than if you are part of a two-income couple," says Jan Cullinane, author of AARP's "The Single Woman's Guide to Retirement."
Additionally, because mothers in particular tend to go in and out of the workplace and give up career momentum to take care of their families, they often face lower income prospects than fathers, says Jon Ten Haagen of Ten Haagen Financial Group in Huntington, N.Y. Plus, a wage gap still exists between the sexes.
Attending to financial planning now will pay off in the long run. "The biggest problem I see is people not getting started," says Ten Haagen. "The best gift is to get started."
|Tip No. 1: Take care of estate planning|
The most important thing to do for your underage children is to decide whom their guardian will be, says Ten Haagen. Someone who is your age or younger is ideal; an older person might not be around if something happens to you.
Ten Haagen recommends choosing an executor who has a head for finance and is well-organized, as the executor will need to make sure fees are paid and to put assets where they are supposed to be.
"You need a will that is up-to-date, specific and clear," Ten Haagen adds. He also recommends a durable power of attorney and a health care proxy. "Review your will periodically (every three to five years) or when there is a life event," he adds.
Life insurance (see Tip No. 7) can help provide for your children's needs should you die before they are adults. The proceeds can be placed into a trust with guidelines for distribution that you determine in advance. Here, you need to select a trustee who will ensure your wishes are carried out.
|Tip No. 2: Save for college|
"If you need to make a choice between saving for retirement or paying college tuition, choose yourself," says author Cullinane. "Helping your child with college expenses is admirable, but don't do it at the cost of your own future."
Ten Haagen is equally blunt: "This (saving for college) should not be a priority if money is a concern." He points out that a student can go to college with a grant, scholarship or loan, but if you need to buy a loaf of bread (or retire!) you have to have money in hand. "Have the child get some skin in the game," he suggests. "It can be some, most or all of it if you can't afford it."
Cullinane also suggests that families in this position consider a community college, which can provide a quality education affordably. "They are less expensive than four-year colleges, and most have agreements with four-year institutions so your child will be automatically accepted as a junior in a four-year college if they receive their two-year degree, and their diploma will show the four-year institution on it."
|Tip No. 3: Plan your lifestyle|
A single parent has many competing financial goals. How should you prioritize them? That's where lifestyle planning comes in -- deciding how you would like to live now, as well as in the future.
"Thinking of retirement as something in the future often results in postponing or no savings," Cullinane says, "especially when the immediacy of paying today's bills looms." To get started on lifestyle planning, you need to know how much you're spending now and how much you're likely to spend in the future. Then, compare that with your income now and your likely future income.
"Bucket budgeting" can help, suggests Cullinane. For this, you create four different accounts: one for fixed monthly expenses such as food, mortgage payment and recurring bills; another for long-term expenses, such as retirement, replacing appliances and cars; a third for emergencies; and a fourth for discretionary spending.
"Put the appropriate amount of money into the first three, and whatever is left is your discretionary or 'fun' spending," says Cullinane. "If there is nothing left for that month in the 'fun' bucket, you simply go without -- you don't dip into the other buckets. Harsh, but necessary."
|Tip No. 4: Save for retirement|
If you're trying to make the mortgage payment, retirement savings might seem like an unattainable goal. "At least put something in," Ten Haagen says. "Maybe it's $10 a month." Also consider that if your spouse has died, he or she may have retirement funds that should come to you. In a divorce, spouses are entitled to share retirement assets. Be sure not to overlook these when assets are divided.
Ten Haagen recommends considering whether you really need to retire at 65 -- and to think about what you want to do in your retirement long before you get there. What will keep you active and engaged? Maybe you'll continue working part-time. Factor that into your planning.
"A big mistake people make, especially women who go in and out of the workforce, is they accumulate a few thousand dollars in retirement savings, then leave the job and just take the money out and spend it. After all, it isn't that much money," says Ten Haagen. "But it's the most expensive money you can find. Taxes and penalties (for withdrawing the money) can add up to 50 percent."
Once you have money in a retirement plan, he says, "Don't take it out. Let it grow tax-deferred."
|Tip No. 5: Save for emergencies|
Bad things happen -- the roof needs to be replaced, you lose your job. Deal with these problems not after they happen but through prior planning. "You have to take responsibility," says Ten Haagen. "You have to think about the finances of raising a child."
He recommends sitting down with a financial planner as you go through major life changes and "getting real." This means before marriage, before you have children, before you go through a divorce and after a death. "You have to think the consequences through. A Certified Financial Planner professional can help you sort through the decision-making."
Cullinane suggests that bucket budgeting (see Tip No. 3) can help you reach savings goals. She cites a study showing that when people were asked if they could save 20 percent of their income, most said no, but when people were asked if they could live on 80 percent of their income if they had to, most said yes. "So, be aware of how you frame questions to yourself. You might be surprised how it can change how you think."
|Tip No. 6: Get health insurance|
"Health insurance is the number one insurance need for a single parent," says Tom Morrill, owner of The Morrill Insurance Group. He says he became an insurance broker as a result of his experience trying to find health insurance after his former employer went bankrupt.
For the uninsured, medical costs can be crippling. A recent study led by a Harvard group published in The American Journal of Medicine revealed that 62 percent of bankruptcies were caused by medical debt.
Losing health insurance commonly occurs after the death of a spouse or a divorce. Now that the insurance exchanges from the Affordable Care Act are up and running, comparison-shop for policies at your state's marketplace or at HealthCare.gov -- or find a reliable and experienced broker who will do the shopping for you. The Underwriters offers information about brokers on its site. You can also get a quote through Bankrate's insurance channel.
|Tip No. 7: Get life insurance|
Morrill says that life insurance is the second-most important requirement for parents, right after health insurance. What you purchase depends on your family and finances, but Morrill recommends a policy that will at least see children through high school.
"A term policy is most economical," he says. "It's pure insurance. You're paying for a death benefit." He calculates that a healthy 33-year-old woman would pay about $240 a year for a 20-year term, $500,000 life insurance policy. "So if you're in your 30s, with a young child, this would get your child through college," he says.
To determine your life insurance needs, you have to calculate what you want the proceeds to do. You'll want it to cover living expenses, but what about paying off a mortgage, or paying for college? Morrill warns that if you choose a shorter-term plan, such as five years, you might not be able to renew it if your health changes.
|Tip No. 8: Get disability insurance|
"Your income is your most important asset," Morrill says. "Have you insured your most important asset?" That's what disability insurance does -- and it can be especially crucial for single parents who don't have a second income from a spouse to help cover the gap. Morrill recommends that you check with your employer to see whether it offers the benefit. Generally you will get a reduced income amount when you claim disability -- between 50 percent and 70 percent of your salary.
Disability policies come in two durations -- short-term and long-term -- depending on whether the disability will last weeks or months versus years. "If you have to choose, go with short-term," says Morrill. "Most disabilities are short-term, not lifelong."
When you buy a disability policy, the premium is usually fixed, and the younger you are when you purchase the policy, the lower that monthly premium is likely to be. You might want an "own occupation rider," which means the disability insurance will pay out if you can't perform your own occupation, even if you can perform other jobs.
"Social Security disability payments may also offset the payment you receive from a disability policy," Morrill points out.
|Tip No. 9: Consider long-term care insurance|
Long-term care insurance can be similar to disability insurance, Morrill says. It's intended to provide for your care if you have trouble with the activities of daily living such as bathing, dressing and eating. Generally, it is used as you become increasingly elderly and frail and is sometimes paid out wholly or partially in cash rather than as a reimbursement of expenses for care.
"I wouldn't necessarily recommend it to a 35-year-old unless they have all their other bases covered," says Morrill, "but I wholeheartedly believe in this if you have the funds."
A comprehensive long-term care insurance policy should pay for things like remodeling a house for wheelchair access, home-health aides and home helpers to keep you in your home. It should also cover stays in assisted living facilities or skilled nursing home facilities. "This is especially important for women," says Morrill. "Who is going to take care of you?"
He says that 60 percent of long-term care insurance claims are paid to women.
"Build a plan for long-term care starting at about age 45," Morrill says. "This doesn't mean you necessarily buy a policy. But it means you think about who is going to take care of you and how you fund that plan of care."
Read the original story on Bankrate.com.
This work is the opinion of the columnist and in no way reflects the opinion of ABC News.