Attention: Single Ladies! If you’re like me, when you hear “single ladies” your mind immediately goes to Beyonce’s 2008 Grammy Award-winning “Single Ladies (Put a Ring on It).” Yes I still remember that song and her iconic dance! Thinking back, it makes me wonder if Beyonce was astutely studying U.S. Census Bureau¹ information when she wrote and recorded that song — a song that would resonate with nearly 118 million single women (and single men) over the age of 18 in 2008. Even today, based on current Census Bureau information, there is a whopping 52% of women who are single (e.g. widowed, divorced, separated, or never married).

As a CFP® Professional, I help clients create, implement and monitor their financial plans. And I especially love working with single women to help them navigate their financial choices and identify potential blind spots that could impact their future. More and more women are becoming proactive when it comes to their financial futures, whether they find themselves suddenly without “a ring on it” or simply choose to maintain their independent lifestyle.

Whatever the case, financial planning for a single woman differs from couples in a variety of ways due to income dynamics, financial responsibilities, and life goals. It’s important for single women to be aware and to understand these factors that affect their financial plan and future retirement. Here are the key areas I typically discuss with my single female clients:

• Emergency Fund: Single women may need a more substantial emergency fund (likely 6 months or more of living expenses) to account for the lack of partner’s financial support in case of an emergency.
  • CONSIDERATION: Consider using a High-Yield Savings account (HYSA) to hold your emergency cash fund

• Income Considerations: Living in a single income household requires a greater emphasis on budgeting, savings, and building a stable financial foundation. Women face a gender wage gap in the US. Since most people invest a percentage of their income/paycheck, the dollar amount saved will be lower.
  • CONSIDERATION: Consider increasing your savings into retirement accounts at least 1% per year until you can max out your savings.

• Longevity: On average, women live 5 years longer than men – a very important consideration for both single women and women who are surviving spouses².
  • CONSIDERATION: Financial plans should include higher health care costs as well as a discussion around long-term care insurance.

• Investing: Research indicates women are more likely to keep funds in cash as opposed to investing when compared to their male counterparts³. While cash is a secure investment, it also misses out on potential growth and likely doesn’t keep up with inflation.
  • CONSIDERATIONS:
    
    • Consider ways to learn about investing, whether It be through trusted family members or friends, an advisor, or educational groups. Get familiar with McKinley Carter’s financial education initiative for women called, The Savvy – A Society of Women Pursuing Their Ideal Life. The Savvy is a resource for women to become empowered with a firm financial foundation.
    • Understanding one’s risk tolerance or capacity for taking risk can also bring comfort, especially for women starting their investing journey and also for those that have been investing longer.

• Care Giving: Over 75% of caregivers (for children or parents) are women⁴. If a woman needs to leave the workforce to care for a loved one, the salary and wages lost lead to a reduction in retirement savings and Social Security benefits
  • CONSIDERATION: If you leave the workforce, try to continue to save for retirement using a savings vehicle best-suited for your situation and eligibility requirements. Consider a traditional or Roth IRA, or invest in a nonretirement account.
• Estate Planning: Many people think Estate Planning is all about what happens when you pass away; but it also about choosing someone to make both financial and medical decisions for you if you incapacitated.
  • CONSIDERATIONS:
    
    • Medical power of attorney (POA), also known as health care proxy, details who you have designated to make medical decisions on your behalf. It outlines your preferences for medical treatment if you are unable to communicate due to an illness or incapacity.
      
    • Financial power of attorney (POA) is like the health care proxy but deals with financial matters. If there is not a Financial POA and you are incapacitated, a court would need to appoint someone to handle financial decisions, which could delay access to banking and/or investment accounts. Creating a Will to aid in the passing of your assets to heirs or organizations is a must. If there is no will, the courts will utilize state law to determine who receives the inheritance. Like Donna Summer said, “She Works Hard for Her Money” so you should decide who inherits it!
    • Beneficiary Designations on accounts are another way to ensure you decide who inherits your hard-earned investments.
      

Further, if my single female client happens to be a business owner, there are a slew of other important considerations to address — but that's a topic for a future blog!

Suffice it to say, while both single women and married couples use similar financial principles, the context and implementation can differ significantly. A single woman’s financial plan may likely require a stronger emphasis on individual responsibility, emergency preparedness, and independent goal-setting. Conversely, couples can often collaborate and share the financial load. At the end of the day, everyone should tailor their financial (and life) plan to their own specific circumstances to achieve financial stability, security, and thus, autonomy.

If you need professional guidance, we are here to help. The McKinley Carter Advisory Team can assist in the creation, implementation, and monitoring of a financial plan that best fits the unique situation of single clients. Let’s start the conversation!

Sources:


¹ https://fortune.com/2023/03/18/record-number-american-women-single-costs/

² CDC/National Center for Health Statistics, Life Expectancy Tables, selected years 1900–2016, published 2017

³ Fidelity Investments 2021 Women and Investing Study

⁴ "Aging in America," Institute on Aging, 2018