Happily Never Married

Single Women and Financial Independence

I won’t bore you with what you already know and what has already been said. Women are at a disadvantage in preparing for their financial independence because they generally make less money than men, interrupt their careers to take care of children and parents and, in general, enjoy longer life spans. If they are widowed, they often face a sharp decline in income when their spouse dies. If divorced, they find themselves fighting to make up for the resources they didn’t accumulate for all the same reasons mentioned above. For GenXers, those born between 1961-1981, half of those found at risk of not having enough money for retirement were single women. About 57% of Millennials, whose average age is now 28.5, are single.

Bottom line, there are a lot of single women out there!

For those nearing retirement or in retirement, boomers, widows and divorcees, the strategies for developing financial independence are different than strategies for younger women. But for both groups, young and older, passively accepting the somewhat sobering facts above is in fact unacceptable! Instead single women should be aggressively executing strategies that enable them to plan for a comfortable, financially independent lifestyle and attacking those strategies with a vengeance.

For the GenXers and Millennials their advantage is that they have time. While a recent study by the Society of Actuaries report found fewer singles than couples put a high priority on retirement savings, for single women not prioritizing saving is a dangerous mistake. Time is their friend and the sooner they begin focusing on their financial independence the easier the work will be. I want to stress those two words, Financial Independence, not retirement savings. What I am talking about is building your “go to hell” flexibility account. This is the account that gives you choices. This is the account that will allow you to thrive, start that business and give you the confidence that only comes from taking control of your life and being able to say yes to those things you want. This is also the account that leaves you less vulnerable if the unexpected happens. This is your “I’ve got this handled account!”

In addition to saving, younger women do have the opportunity to focus on their income and make sure they are getting paid what they are worth. This is important. Society is becoming aware of the value of female leadership and young women can begin to take advantage of this and use this awareness to close the gap on wages. Negotiating their first paycheck is critical. It is the place where all things start. The next 40 years compensation package and all associated benefits start here. Retirement benefits, social security benefits and pensions or deferred compensation benefits are generally predicated upon salary. While women understand this, women are also known to be less effective and confident in the salary negotiations. They are often not offered nor do they seek mentors. I believe young women can change these trends, but they will need to do so actively. No one is going to hand them anything.

All women must make the decisions about lifestyle, decisions that allow them to prepare for their independence, but single women must make them actively because they are their only income and saving source. There is no backstop. In understanding this they should make sure they have created the space to save. It is important to live beneath your means. Equally important is to start early, start now and pay yourself first. For women who think they may be behind in their financial independence, put yourself first. I have worked with many women after a “grey divorce” who continue to put their adult children and grandchildren before themselves. When they ask me about helping with their grandchildren’s education, I remind them Grandchildren have a longer time to recover their college investment than Grandma does. Grandchildren can borrow for college, but Grandma can’t borrow for retirement.

Women should consider alternative living situations if it benefits them. More and more women are sharing a home. Not only does living become cheaper when shared, there is some comfort in the company provided and sharing resources. The homes chosen should allow for aging. I find more single women in their fifties choosing to move to retirement communities early where they can plan for their life transitions. Planning for continuing care is essential. Single women should be careful to maintain proper estate planning paper work that allows health information to be shared to third parties and insures that proper powers of attorneys are in place.

More women are single today than ever before. Women are the ones choosing to divorce today, twice as often as men. Because of longer life spans, women are also more likely to be widowed. Young women are choosing to remain single longer, over three times more frequently than previous generations. I don’t know that women prefer to be single in retirement with the resulting financial consequences, but they must believe the benefits of maintaining their independence outweigh the costs of these consequences. I believe that women can create the quality of life they desire if they plan for it. But that is the key, they must plan for the life they have chosen.

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