Field Work
May 15, 2012
Financial Perils of the Single Woman
Being a single woman is serious stuff – financially that is.
One website recently published a humorous list of the advantages of being a single woman today. “You don’t have to be worried about not getting a special gift from Him on your special day because there is no Him.” Or: “There is no argument about where or when to go on vacation.” Toilet seats were also mentioned.
This may not amuse 30-something women with serious concerns about whether they’ll marry and have children. But face it: single women of all ages have more difficult money issues than their married friends. When two incomes are coming into the household, a couple shares the rent or mortgage. Fixed expenses can add up over a single woman’s life or during long bouts after, say, divorce.
“Single women are far more at risk,” said Wendy Weiss, a former financial adviser who writes a blog on her website, Hot Flash Financial. “If we make 77 cents on every dollar [men earn], men have 23 percent more discretionary income, and that’s usually the amount we advisers recommend you put away,” she said. Women also live longer and need more money to get through retirement, she said.
Prior to retirement, the rule of thumb is that single people need well more than half, possibly as much as 70 percent, of a childless couple’s combined income to afford the same lifestyle. It is higher for the poor (whose fixed expenses consume more of their total income) and for single mothers (for obvious reasons).
Household finances are far more complex. Married couples with children need life insurance, and rising college costs can cause their financial edge to dissipate. But it also helps, financially, to have a husband who brings home more bacon.
A couple preparing for retirement after the kids leave home also has more income to 1) pay off the house or 2) sock money into the 401(k). Plus, even if you don’t have a pension, there’s a chance your husband might. Single women also don’t have the advantage of a potentially larger Social Security check widows receive through their husbands, who often earn more.
Below are prior Squared Away articles about the differences in the financial well-being of married versus single women, and women versus men – links to the articles are at the end of each headline. There’s a lot to think about.
Will Saying ‘I Do’ Affect Your Saving?
Married Women Gain on Singles
Women Lag in Retirement Readiness
For Many Elderly Little Left as Life Ends
Women Crave More Information
Thanks for the article and the link to Wendy Weiss’ blog. I found some useful advice there, starting with “What You Did Right” http://hotflashfinancial.com/act/discover-did-right/
Many of my friends don’t have a clear plan for supporting themselves in their later years, particularly now that the economy has changed expectations and opportunities for so many. Thanks for bringing attention to this important issue.
It all depends on how much you make before retirement, marital status, and what your Social Security benefits may be. Single people will certainly have to save considerably more than marrieds, since marrieds get a higher SS benefit.
A couple making the average income of $50,000 before retirement can replace nearly 60% of their pre-retirement income with Social Security. A single person would only replace about 40%.
And 60% of women make less than $50,000.
The more you make, the less Social Security covers your pre-retirement income. And singles, especially single women, need to save more than marrieds.
In addition to the financial issues, there is the issue of control. A single person, male or female, must have a back up plan in case of illness or long-term disability. There are ways to have a great advocate, without being married. Your estate plan is about your quality of life first and your wealth/belongings second.
Learn more at EstatePlanning101.org