10 Ways Retirement Looks Different for Single Women
Although there are plenty of advantages to being a single woman, your approach to retirement looks different from someone who is part of a couple because you must rely solely on yourself for financial support.
Jay Zigmont, Ph.D., certified financial planner (CFP) and founder of Childfree Wealth said, according to a recent study by Fidelity, the “single tax” is between $440,000 and $1 million across one’s life.
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“It is not a literal tax, but it is the extra cost of not being able to share rent, utilities and more,” he said. “Soloists need to plan for these extra costs in addition to making sure they are self-reliant in their financial plan.”
Here are the various ways retirement differs for single women and suggestions for dealing with them.
Disability Insurance Is a Must
“Disability insurance is a must for single women,” Zigmont said. If you get injured and can’t work, Social Security disability isn’t enough to live off of.
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You Might Not Need Life Insurance
“If you are single with no kids, chances are there is very little or no need for life insurance,” Zigmont said. “Life insurance should protect your income for someone who needs it.”
An Emergency Fund Is Crucial
Zigmont said to make sure you have six months of expenses in your emergency fund. “Even with disability insurance, there may be gaps in your income you need to cover,” he said. “You need to make sure you have a safety net.”
Long-Term Care Insurance Premiums Will Be Higher
Zigmont said that LTC insurance is expensive and single women pay the highest premiums.
“The reason single women pay a higher premium is that on average they will spend 3.7 years in care. And a year in a skilled nursing facility on average is $115,000,” he said.
Estate Planning Is More Important Than Ever
“As a single woman you need to appoint someone as your medical power of attorney, financial power of attorney and executor,” Zigmont said. “If you don’t create POAs and a will, the government or healthcare organizations will make decisions for you and they may not reflect your wishes.”
You May Have Less Money In Retirement Accounts
Mindy Oglesby, founder and CEO at Oglesby Wealth Strategies said that on average single women have less money sitting in 401(k) and IRA accounts.”
Zigmont said single women should try to max out their 401(k). “Start by putting aside enough to get your company match,” he said. “Each year when you get a raise, try to increase your 401(k) contribution by at least half of the raise.”
You Must Shoulder Healthcare Costs Alone
“Single women may have to be solely responsible for healthcare costs while in retirement, whereas married women might have the ability to use their spouse’s health benefits,” Oglesby said.
Conservative Investments Can Lead To Less Growth
Oglesby also pointed out that in general, women tend to be more conservative investors, which can work against them.
“Although being more risk-averse allows the feeling of comfort nearing or during retirement, it can also mean less growth when women are trying to accumulate wealth in their early investing years.”
Social Security Strategizing Is Even More Essential
Gina McKague, owner and founder of McKague Financial, said that when single women plan for retirement, it becomes even more essential than it would be for a couple to strategize regarding Social Security.
“There is no second or potentially higher Social Security trigger planning to rely on,” she said.
Additionally, Oglesby said, “Social Security checks are 20% smaller for women who first claim at 62 to 64 years [of] age, compared with men the same age.”
Life Expectancy Is Longer for Women
Stephen Kates, CFP, principal financial analyst for Annuity.org and former wealth management advisor, said that life expectancy is also a factor for all women, including single women.
“Women live longer than men and therefore need to plan for income to last longer than a similarly healthy single man of the same age,” he said.
Oglesby further said, “Because of [longer life], it causes an increase in retirement costs because [women’s] savings are extended over more years.”
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This article originally appeared on GOBankingRates.com: 10 Ways Retirement Looks Different for Single Women
