By Reshma Kapadia, March 1, 2019
Anyone who has ever spent a frustrating few hours clothes shopping knows that one size doesn’t fit all. When it comes to retirement, many women, in particular, need a custom fit.
Women have long been at a disadvantage in retirement. Generally, they earn less than men, interrupt careers to raise children or care for parents, and live longer.
For single women, the situation often is even worse. Their retirement savings tend to be lower than their married—and even widowed—peers. While widows can face a sharp decline in income when a spouse dies, they often inherit their partner’s assets and spousal benefits from Social Security—a source of funds unavailable to single women. Plus, single women face unique challenges related to higher costs for retirement living and long-term care.
“I hear from a lot of women who say all the retirement advice is about couples,” says Cindy Hounsell, president of the Washington, D.C.–based nonprofit Women’s Institute for a Secure Retirement. “You really need to look for a different plan if you are single, and nobody else is going to help you, so you need more saved.”
A recent report by the Employee Benefit Research Institute, a nonpartisan think tank, looked at retirement security for Gen Xers—the population cohort born roughly from 1961 to 1981. The study found that only in one group of Gen Xers—single women—were half the people at risk of not having enough money to cover basic retirement expenses. The average expected shortfall also is greater for single women, at $73,000, or twice the estimated average shortfall for single men and more than triple that for widows. The gap persists even in the highest income quartiles, where 13% of single women are at risk of having a shortfall of $100,000 or more. That compares with just 7% of single men and 4% of widows.
Americans are staying single longer, and marriage rates are declining, which means that more women could face this scenario in the future. About 57% of millennials (the median age for this generation is now 28.5 years) have never been married, according to a recent survey by the Pew Research Center. When today’s older retirees—the silent generation—were the age of today’s millennials, only 17% had never been married.
While a recent Society of Actuaries report found that fewer singles than couples put a high priority on retirement savings, financial advisors stress the importance of single women starting to think about retirement even earlier than other people. Their focus should be not only on saving more than their married peers, but also thinking differently about insurance, retirement housing, care-giving plans, and estate planning.