Photo of Ray Ferrara CFP Ray Ferrara CFP Jul 14, 2020

Having total control over your finances as an independent woman can be liberating, but it can also be intimidating, especially if you are planning to retire. Planning for retirement as a single woman can be more challenging than it is for a single male for a variety of reasons. 

Women tend to live longer than men and therefore need to save more money. Women also tend to earn less than men. Women can be more conservative in their investments, which means they typically do not earn as much. 

However, none of these facts can stop you from enjoying your retirement if you have a financial plan in place. To help you get started, here are five financial planning steps that can help you prepare for retirement as a single woman:

1. Save as soon as possible

As the sole wage earner in your household, you are entirely dependent on your own income. You need to be prepared for unexpected circumstances like disability or unemployment. Most financial professionals recommend having at least three to six months of your income saved for emergency and opportunity situations, but as a single person without a partner’s income to supplement your own, you might want to consider saving more.  

In addition to saving for unexpected emergencies, you are also responsible for your own retirement planning. The rule of thumb with retirement is the sooner you start saving, the better. Financial professionals recommend contributing anywhere between 10 to 20% of your gross annual income into your retirement. 

Regardless of how much you are able to contribute now, you should always try to contribute something. After years of collecting interest, even your small investments can have an impact on your retirement nest egg.

2. Understand your financial circumstances

In most households, the man is the one who makes most financial decisions. This is likely tied to the role of the man being the traditional wage earner for the household. However, as a single woman, you do not get to rely on someone else to make the financial decisions for you. Whether you have been single for a long time or are recently single, you need to get to know your finances now, so you can be better prepared to make short-term and long-term decisions for your financial security.

3. Get to know your Social Security benefits

Social Security benefits can be complicated for anyone, but especially for a single woman. Women who are divorced can claim the benefits of their ex-spouse if they were married for at least ten years. Widows can earn the benefits of their deceased spouse if the benefit is bigger than their own. It is important to know how you are covered and when you can start collecting to maximize how much you can receive and use to supplement your retirement income.

Also, regarding the importance of knowing your own finances, you should be aware of how much you have in retirement to live off of so you can decide whether to delay your Social Security benefits or not. You are eligible to receive benefits at age 62 years old, but your payments increase for each year you delay them until the age of 70. This is especially beneficial for women with a comfortable retirement nest egg because women tend to live longer than men and can benefit from those higher earnings for longer. 

4. Do not be afraid to be more aggressive with investments

Women tend to be more conservative investors than men. Conservative 401(k) and other investments tend to grow more slowly and predictably with less risk of losing your investment. However, if you want to boost your retirement nest egg so you can potentially have more to live off of, you need to consider getting more aggressive with your investments.

With greater investing consistency comes greater opportunities to generate more money. Investors can get caught up in following trends and buy and sell at the wrong times. Buying only when stocks are hot and selling when they look bad can lead to a loss of wealth and the opportunities to earn more in the future.

Remain consistent in your investments. Expect long-term investments to go through volatile periods. Do not panic when you see the market dip. With some time, you may see the trend pick back up and grow beyond points it had in the past. If you are ever concerned about whether you should stick with an investment or not, you can always talk to a financial advisor for advice. 

5. Invest in long-term care insurance

Sooner or later, you are likely to need the care of another person as you grow older. You need to make sure you have a plan for how you will be cared for in the event you are no longer able to fully care for yourself.

Long-term care can be expensive, so if you want quality care, you should invest in long-term care insurance now to make sure you are covered.

You never have to face retirement alone with ProVise Management Group by your side

Retiring as a single woman does not mean you need to retire on your own. Making financial decisions is difficult, especially when you have so many other responsibilities on your plate. At ProVise Management Group, our CERTIFIED FINANCIAL PLANNER™ professionals can be by your side to help you make a financial plan including short and long-term investment strategies and your retirement.

Our professional team of female and male planners are familiar with the unique challenges women face when it comes to their finances. We are proud to offer financial services that specifically cater to the needs of independent women who want to reach their financial goals.

We can work closely with you to get to know your circumstances, your goals and risk tolerance to help come up with a financial strategy for you. The plans we create are always personalized to the needs and values of each individual client. We also offer an unconditional money-back guarantee if you are unhappy with your written plan. Simply return it to us and we will refund 100% of the fee paid.

Are you an independent woman who is ready to reach your financial goals? We are here to help. Contact ProVise today to schedule a complimentary consultation.