Starting over after a big life change. Advice on savings and retirement?

I’m 37, recently divorced, and a parent to an 11-year-old, working to plan for the future. I was a stay-at-home parent for nine years and have been rebuilding my life over the past two years. With the money from being bought out of the mortgage, I paid off my car and covered living expenses while finishing school. I now have a degree, a job, and feel like I’m on steady ground but also overwhelmed with figuring out my next steps.

Here’s where I stand:

  • Monthly take-home pay is $4,400 (after deductions).
  • I contribute 5% to a Roth 401k, 5% to a Traditional 401k (employer matches 5% on the Traditional), and 15% to a HYSA for my emergency fund. These deductions are already accounted for in the take-home pay.
  • Remaining debt is $4,500 from a medical procedure on a credit card (I was uninsured for a year).
  • Monthly expenses range from $3,000 to $3,500 depending on my child’s needs since my former partner is currently unemployed.

I’d love advice on:

  1. Should I keep splitting contributions between a Roth and Traditional 401k? Roth feels better, but I’m not certain.
  2. Should I use my HYSA to pay off the $4,500 debt, then rebuild the emergency fund? The HYSA currently has $7,500.
  3. Should I adjust to save 10% in the HYSA and max out a Roth IRA? Or maybe add an HSA?

Short-term: I want to buy a house by 2025, but my income feels like a limitation. Credit score is 812. I may need to wait until I earn more.

Long-term: Retiring by 55 is my dream, but that’s less than 20 years away. I know it’ll depend on maximizing my savings and earning potential. Any suggestions are greatly appreciated!

I don’t have answers to your financial questions, but I just wanted to say you’re doing an amazing job. Starting over after such a big life change isn’t easy, and you’re setting a great example for your child. Keep going—you’ve got this!

@Nash
Thank you! Becoming independent after years of relying on someone else has been so rewarding. I’m trying to make the most of this opportunity for myself and my kid.

If you want to retire at 55, have you thought about getting a 15-year mortgage when you buy a house? That way, you could be debt-free by 55. Also, will you have enough savings to live on until you can access retirement funds or Social Security?

@Tobi
That’s a good point. I’ve thought about a 15-year mortgage, but I also want the house to be a solid investment. I’d aim for something in a good school district and suburb, so it’s a stable option even if I need to stay longer.

  1. I’d suggest contributing to the Traditional 401k just enough to get the employer match, then putting extra into a Roth IRA. It gives you more flexibility for withdrawals later.

  2. If the interest on the $4,500 debt is higher than what your HYSA earns, it’s better to pay off the debt and rebuild the emergency fund.

  3. Once the debt is gone, consider maxing out the Roth IRA. An HSA can be a great option, especially if your employer contributes and you don’t have major ongoing medical expenses. Build up your emergency fund first, then explore this option.

@mathewbird
I appreciate the insight and advice! I’ll look into the HSA route to see if it fits into my plan.