Retirement Planning for Single Women

A new client of mine recently lamented that as a single working woman, getting on track financially for retirement was much harder for her than for her friends who have partners. That led her to approach preparing for retirement from a place of frustration, fearing she won’t have enough money to live comfortably when she chooses to retire. And her feelings are not without merit. Women face many financial challenges that men do not including:

• Statistically, women earn less than men, 84 cents for every $1 earned by men, meaning less money to save for retirement.
• Women disproportionately take more time away from the workforce to care for children or aging parents, leading not only to less savings but also to reduced income, which also affects Social Security benefits.
• Women often put themselves last. They’ll cover the costs of an aging parent rather than put that money towards their retirement, or they’ll dip into savings to help others.

According to the U.S. Census Bureau, approximately 52% of women over 18 are single, which reflects a gradual increase over the past decade. Additionally, the percentage of women who have never married has increased to over 30%. With more women becoming or remaining single throughout their lives and into retirement, what steps can they take now, both on their own and in working with a CERTIFIED FINANCIAL PLANNER® professional, to ensure they maintain their desired quality of life now and in the future?

• Maximize your income. Advocating for yourself regarding your income is critical. Know what others in your field and similar roles are earning so that you can negotiate the best monetary deal for yourself. Several states have instituted pay transparency laws, allowing you to understand what others are paid for similar roles.
• Save consistently by making the choice to pay yourself first. Start by contributing the maximum allowable amount of money to your employer retirement accounts, or as much as possible. By making these savings automatic every pay period, you never miss the money.
• Understand what you’re bringing in and where it’s going every month. Track your spending so you know on average how much you need monthly to cover costs. A CFP® professional can assist you with creating a budget to help you understand how much your life costs now so you can determine how much you need to have saved to replace that lifestyle in retirement.
• Create a plan to tackle and pay down debt. Debt can stand between you and the retirement you desire, so if there are student loans, mortgages or credit card balances, you’ll need a plan to pay these off before or after the time you choose to stop working.
• Have a plan for longevity. This not only means having the money to live a long life but having a plan to cover healthcare costs in retirement, which might include long term care insurance. Consider where you’d like to live, what amenities or activities are important and if you’ll have a supportive social network of family or friends. Studies show critical to living a long, healthy life is social connectivity.
• Make sure your wishes are carried out if something happens to you. Estate planning documents ensure your wishes are met by naming an estate administrator and beneficiaries. They also should include your healthcare directive and power of attorney. It’s important to have someone designated who can speak for you should you be incapacitated or die.

Single professional women may have unique challenges when it comes to planning for retirement. By having a plan of action and a knowledgeable guide in a CERTIFIED FINANCIAL PLANNER® professional, single women can have a personalized retirement plan and a resource who can help you navigate complex financial decisions you’ll encounter through life and into retirement. Find your CFP® professional today.