More U.S. adults than ever before are single — 110 million at last count, according to the US Census Bureau — though the number continues to rise. The majority of them, some 53%, are women. That, as singles expert Bella DePaulo points out, can be a positive. Singles are having more sex than marrieds, she notes. And the idea that being married keeps you healthier seems to no longer be universally accepted — particularly for women. But when it comes to money, being single brings a variety of different, if not necessarily tougher, challenges.
Single women are the least likely demographic to have a financial plan in place for setting savings goals and paying down debt.
In fact, one-third of single women are concerned about their finances according to Single Women and Money, a new piece of research from Fidelity Investments. It also revealed single women are the least likely demographic to have a financial plan in place for setting savings goals and paying down debt. So what do you need to do and when do you need to do it? Here's a decade-by-decade guide to embracing your financial future.
In your 20s
- Ensure your first jobs offer the “total package.” In addition to negotiating the highest possible salary, look for packages that include a 401(k), affordable healthcare and tuition reimbursement if graduate school is in your future, says Kathi Grace, certified financial planner and managing director at United Capital.
- Get a grip on student debt. Don’t stress to prepay at the expense of contributing to your 401(k) or other retirement. Instead stick to the schedule from your lender or — if that’s unaffordable — reduce your payments by refinancing or looking at income-based repayment.
- Add beneficiaries to all your financial accounts and see an attorney for a will. “If something were to happen, this would go a long way toward reducing family stress,” says Mandi Woodruff, money expert at financial education site MagnifyMoney.com.
- Learn how to save and invest. Start stashing money in an emergency fund each month, while simultaneously contributing to your 401(k), Woodruff says. Even if you’re only able to save a little to start, aim to eventually save and invest a total of 15% of what you make each year, including matching dollars from your employer.
- Get on a budget, using an easy-to-use budgeting software like Mint. Figuring out where your money is going frees you up to both save and spend guiltlessly — without taking on credit card debt.
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In your 30s
- Pay down debt. Your 30s can be expensive, Grace explains. You may be trying to climb the ladder in your career, travel and buy a home— but you won’t get to do any of that if you accumulated debt in your 20s. Winding down the student loans and eliminating credit card debt can help you move on.
- Consider a financial planner. “Everyone gets overwhelmed with finances, and while married couples have someone to bounce ideas off of, single women need to seek out advice elsewhere,” says Kelly Lewis, CFP at John G. Ullman & Associates.
- Load up your 401(k) or IRA.“As your earnings start to ramp up, it’s the best time to solidify the savings habit and begin making smart investments that can grow faster than inflation and provide for long-term growth,” says Kimberly Foss, CFP, founder and president of Empyrion Wealth Management. And don’t be afraid to invest aggressively, putting the lion’s share of your money in stocks early on— you still have 30-40 years to recover from any mistakes or drops in the market.
- Think about real estate. More single women than ever are buying homes. If that appeals, now’s a good time. If you buy in your 30s, you can be mortgage-free by the time you retire. Just don’t do it if you think you’ll be moving in a 5-year time period.
In your 40s
- Remind yourself that no one is going to give you a retirement loan. In this decade, you may be feeling squeezed on both sides from aging parents and college-bound kids in need of financial and emotional support, but you should continue to prioritize your own savings goals. “Don’t slow down!” Woodruff cautions.
- Decide whether you need life insurance. “As a single woman, you may hear that it’s not necessary to have life insurance because you have no dependents. However this is not necessarily true,” Lewis says. If you have co-signers on student loans, a mortgage, an auto-loan, or even just don’t want the burden of funeral costs to fall on loved ones, life insurance is essential. And if you have kids, it’s a must.
- Build your backup plans. It’s particularly important for single women to have people in their corner to take care of them if they can’t take care of themselves. Name durable powers of attorney for your healthcare and finances who can make medical and money decisions on your behalf if you’re unable.
- Consider short-term or long-term disability options. Disability insurance is more important for singles than just about anyone. “As a single woman of any working age, if you are unable to work for a period of time, you have no other second income to rely on,” Lewis notes.
In your 50s
- Take advantage of catch-up contributions. In this decade (and the one that follows), you’ll be eligible to kick in an additional $6,000 to your 401(k), Woodruff says. Put away as much extra cash as you can.
- Get on a 10-year plan to total debt freedom. You want to retire completely debt free. Make sure your mortgage has been refinanced to the lowest rate possible, and if you have a relatively new 30-year mortgage, look at paying it off in 15, says David Bach, co-founder of AE Wealth Management. If you still have any student loans (for you or your kids), now’s the time to pay those off, too.
- Start thinking more seriously about end-of-life decisions. Make sure the beneficiaries on your will are up-to-date, particularly if you got divorced in the last few years. You also need to think seriously about investing in long term care insurance that can help out with medical expenses, Bach says.
- Clean up all old retirement accounts. If you’ve worked at several different companies, you may have left various retirement accounts sitting unattended. It’s time to roll those over into a current plan — a financial planner can help you do that, Bach says.
In your 60s
- Don’t be afraid to downsize. Look to be near friends and family, for emotional reasons as much as anything else, Woodruff suggests. A small apartment near loved ones can be much more comfortable than a large home where you’ll be more isolated.
- Make sure all estate plan documents are in order. This includes your will, power of attorney, health care directive, and life insurance. “Without the directions in these documents, the decisions would be made through statutory law on your behalf, whether or not that’s what you wanted,” Lewis says.
- Seriously run a calculation of how much longer you want to work. “Do you have a career that will allow you to work part-time for the rest of your life? When do you want to stop?” Bach asks. You may also want to start thinking about mentoring someone at work and passing on some of your wisdom and experience.
With Kathryn Tuggle
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