As Joe Cocker and the Beatles sang many years ago, most of us get by with a little help from our friends. But for single women facing the challenges of retirement planning, it tends to be more of a solo act. Retirement planning for women has an extra set of hurdles because of women’s statistically longer lifespans while simultaneously tending to have less saved for retirement than their male counterparts. For single women—with no partner’s income or savings to lean on—the challenge is even greater. In fact, according to a recent report by the Employee Benefit Research Institute, GenX women, born roughly 1961–1981, who are single at age 65 run the greatest risk of coming up short at retirement, facing an average deficit of around $73,000. Not only that, but single women, who typically do not enjoy the advantage of nearby family members who can help with caretaking, must often spend more on long-term care options and assisted living than married persons.
So what can single women—which includes a majority of women in transition—do to make sure they can afford the retirement lifestyle they need? There are a few common-sense steps you can start taking now that will help you avoid facing retirement not only alone, but underfunded.
- Start saving early. This is the single most powerful weapon in your arsenal in the fight for your preferred retirement lifestyle. Because women usually live longer than men, they will generally live longer as retirees. But when you start saving early, you put the magic of time and compounding on your side. If you work for a company with a 401k or a 403b plan, you should be socking away as much as you can. And even if you don’t, fully funding an IRA—either traditional or Roth—will provide a significant bulwark against the expenses of living alone in retirement.
- Get savvy—now. Single women don’t have the luxury—or, in some cases, the liability—of depending on a spouse to handle or explain finances and investing. As a result, many single women—especially widows—can be bewildered by the idea of planning, saving, and investing for retirement. But there’s a solution: educate yourself. This can include keeping up to date with free financial and investing sites like Motley Fool (www.fool.com), ElleVest (www.ellevest.com), or DailyWorth (www.dailyworth.com), or you might be well advised (no pun intended) to make an appointment with a certified, fee-only financial planner who can answer your questions, explain the world of finance and investing in down-to-earth terms, and help you get started mapping out a strategy that works for your unique situation. Whatever you do, you should make it your business to acquire solid, research-backed information and advice and not depend on the “lottery mentality”—or as I sometimes call it, “hopium”: that somehow, miraculously, your ship is going to come in and all your retirement income problems will solve themselves. In the financial world, knowledge really is power, and as a single woman, no one is going to get it for you. Fortunately, there’s a world of opportunity for you to get it for yourself.
- Learn about your Social Security benefits and options. Social Security, despite all the rumors of its demise, is likely to be part of your retirement income strategy. If you haven’t already, you should log in to ssa.gov and set up your online Social Security account (before an identity thief does it for you). While you’re there, you can explore your various options for when you start receiving Social Security benefits, how much they’re likely to be, and even whether you may be entitled to spousal benefits from an ex-spouse.
- Be assertive. As you seek out financial and investing advice, you’re going to have questions; insist on getting answers that make sense to you. People are going to try to sell you things; don’t buy them until and unless you thoroughly understand them and how they fit into your long-term plan. The point is, you are the only one in charge of your financial future, and you have a right to know all you can about the best way to reach your goals. Don’t let anyone turn you aside from the path you’ve laid out.
I specialize in helping women in transition and other independent, successful women design long-term financial plans founded on facts and proven principles. If you would like to learn more about how I can help, please get in touch. And to read my recent article, “Financially Fit over 50: Tips for Women,” click here.
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