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I’m a single parent of one in my late 20s, currently saving for retirement and my 3-year-old’s college education. Are there any suggested percentages in terms of monthly savings amounts for each category?


Coming up with specific percentages is something best done by a financial planner who has gone over your personal and financial circumstances, as well as your goals, in great detail. There are broad guidelines, however, that planners provide for savers and investors with your general characteristics, sort of a greatest hits compilation of financial advice:
Save as much as you can, as early as you can, to benefit from the compounding effect of investment gains. If you save the same amount each month between the ages of 25 and 65 and your money earns a modest 7 percent annual return, the contributions made in the first 10 years will produce more of your total retirement fund than the contributions made in the remaining 30 years.
Take full advantage of any pension plan offered at work, such as a 401(k). It will offer tax breaks and, most likely, employer contributions. Any additional savings can go into an Individual Retirement Account or a tax-advantaged vehicle for financing education expenses, such as a Coverdell account or a 529 plan.

Your youth helps in another way; you can afford to keep more of your savings is stocks. Stocks are more volatile, and therefore riskier for investors who will need access to their money soon. They produce greater returns over the long run, however, and at your age your run is very long.

-Conrad de Aenlle