Will You Be Able to Afford to Retire?

Single Without Savings

Janine is 42 and unmarried. She spent her 20s in graduate school, then bounced around a series of low-paying jobs. She landed at her present employer three years ago; she enjoys her work and there are chances for promotion. She paid off her student loans last year but doesn't own any property, though she wants to buy a home.

From Bonnie A. Hughes, a certified financial planner and owner of A&H Financial Planning and Education, in Kennesaw, Georgia:
Janine never really thought much about saving until panic set in, so we need to get her into the habit. First, she should work with a financial planner, who can give her a global view of her situation, determine where she is, envision where she'd like to be and measure her progress. A good planner will help her stay on track.

Next, Janine should max out her 401(k) contributions and, if she can, also max out an IRA, preferably a Roth IRA, if her income isn't too high for her to be eligible (more than $110,000 for a single person). Unlike withdrawals from regular IRAs, money withdrawn from a Roth isn't taxed as long as you've waited five years since opening it.

At the same time, Janine should think seriously about buying a home sooner rather than later -- even if it means putting off her Roth IRA for a few years. Mortgage rates are low, and while paying for her mortgage and upkeep may cost more than Janine's monthly rent, owning property lets her build up equity that she can tap as an income source later. As long as she tempers her expectations, she can probably find a reasonably priced home that she can pay off by the time she retires in order to reduce how much income she needs then.

Finally, Janine should pick out just a couple of monthly indulgences and enjoy them thoroughly but otherwise focus on her future. The money she saves should go straight into her retirement accounts.