The Single Woman’s Path to a Happy Retirement

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A recent report from the Rand Corp. brought good news. At least, it was good news if you’re married.

According to their research, 71 percent of Americans between the ages of 66 and 69 are adequately prepared for retirement, including 80 percent of married couples. However, if you’re single, that number drops significantly, with only 55 percent of Americans in that category ready to leave the workforce.

While single individuals of both genders can face an uphill battle when it comes to preparing for their golden years, single women seem to face a distinct set of challenges.

Why single women have it harder

According to Russ Thornton, “Single women have a unique combination of considerations and goals when it comes to retirement.”

Thornton, who specializes in helping women manage their money, is a financial adviser and vice president at Wealthcare Capital Management in Atlanta. He spoke with me by phone regarding how single women should be preparing financially for their life as a retiree.

He says these are among the major issues that could make it difficult for single women to have enough money to sustain them in their final years:

  • Increased longevity.
  • Caregiver responsibilities.
  • Lower incomes.
  • Lack of confidence in financial matters.

Keith Klein agrees. He’s the owner of Turning Pointe Wealth Management in Phoenix and a certified financial planner who works with a large number of female clients. I interviewed him on the subject of finances for single women and, like Thornton, he sees a need for women to be more aggressive in their investments, particularly given their longer expected lifespan.

“Inflation will affect a woman’s life more than a man’s life,” he says, adding that a woman’s longevity means she’ll not only need to cover more years in retirement, but that her money’s purchasing power will erode as she lives longer.

Caregiving can cause significant financial strain

Both Thornton and Klein zeroed in on caregiving as a significant concern for single women, and we’re not necessarily talking about young children here.

“The eldest daughter is usually first to go care for Mom and Dad,” says Klein. “She gives up time, and she gives up income that goes along with it.”

In fact, a 2014 report from the Transamerica Center for Retirement Services found that 74 percent of women taking time out of the workforce to be a caregiver believe it will negatively impact their retirement savings.

Beyond aging parents, boomerang children can also cause financial stress. “Many adult children are coming back home,” says Thornton.

While women may feel an obligation to take care of others, such as older children experiencing financial troubles, Thornton likens the situation to being in a plane where the oxygen masks are deployed. If you fail to put yours on first, you won’t be of much help to those around you.

“Women are always worried about others and neglect to put their own oxygen mask on,” he says, with money for retirement and other savings being the financial oxygen single women need to sustain themselves.

5 practical takeaways to put into action

Money Talks News’ Stacy Johnson offers retirement planning advice for women in this video. Keep reading for tips specifically for single women.

While single women may not be able to do much about tax laws that favor married couples or the fact they often earn less than their male counterparts, here are five ways to get on the path to a happy retirement.

1. Start saving now. When asked what single women need to do to get ready for retirement compared with married couples, Thornton doesn’t mince words: “Start earlier and work a hell of a lot harder” at saving money.

While it may be hard to squeeze money out of an already tight budget, he recommends even as little as $20 a month as better than nothing.

We would add that if you only have a little money to set aside for retirement, you should maximize it by putting it into a fund that will give you the greatest return and tax benefit. For example, a 401(k) with an employer match should be your first choice. Otherwise, an IRA is another good retirement savings vehicle.

2. Be more aggressive with investing. “Women tend to be more conservative and may need a more diversified portfolio,” advises Klein.

If you’re not sure how to diversify, you could read our advice on a simple way to invest your retirement savings.

3. Buy long-term-care insurance early. At age 35 to 45, single women should start to think seriously about who will care for them when they can no longer take care of themselves.

Klein recommends that single mothers, in particular, look for a long-term-care policy that will provide an added layer of protection until their kids are out of the house. “If you’re a single woman between ages 35 to 50, having long-term-care insurance becomes very important because the kids can’t care for you and your parents may be too old or unable to care for you,” he explains.

Depending on an individual’s medical needs and the details of their policy, insurance could pay for in-home care that would allow a mother to remain with her children. Perhaps more importantly, it protects a family’s assets. Without long-term-care coverage, placement in a nursing home or other facility could wipe out savings, money needed to provide financial stability for minor children.

Long-term-care insurance can be jaw-droppingly expensive, but Klein adds that you don’t need to insure yourself for an extended period. A policy covering as little as two or three years may be enough to bridge the gap until your children leave home and, in theory, become financially independent.

4. Claim your spousal benefits. Not all single women were always single women. If you’re divorced or widowed, you may be able to claim a Social Security spousal benefit if you haven’t remarried.

“If you were married more than 10 years, you can claim a spousal benefit,” says Klein.

5. Find a trusted adviser. Finally, sometimes it pays to get a professional opinion.

Thornton says that in his experience, women seem to avoid financial conversations in part because they don’t feel confident regarding the subject. “They put it off because they don’t have a lot of comfort and confidence in financial matters,” he says.

Using a financial adviser can be one way to ensure you’re on the right track. However, not all professionals are created equal. You can read more in our articles regarding whether your financial adviser is really working for you and what all those initials after their names mean. Above all, keep searching until you find an adviser who is not only competent but also comfortable answering all your questions to your satisfaction.

Are you a single woman? How do you feel about your retirement prospects? Tell us about your biggest concerns in the comments below or on our Facebook page.

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