But therein lies a problem, at least when it comes to retirement savings.
Young singles (between the ages of 22 and 35) are about half as likely to open a retirement savings account and save for the future as their married counterparts, according to a study prepared by researchers at the Social Security Administration. “Single women fared particularly poorly on retirement savings,” concluded the researchers. In an era when we are responsible for securing our own financial future, these are troublesome statistics.
Just 22% of single women participate in an employer-sponsored retirement account, compared with 28% of single men, and over 44% of households with married women. More than twice as many households with married women have IRAs (26%), compared to single men (18%) or single women (10%). These results persist after controlling for differences in income, education and other factors.
Married households are much more likely to set specific retirement savings goals, compared to single men and especially single women. Why is that of interest? We know from other research that people who have a financial plan tend to accumulate significantly more assets than those who do not.
These results are critical, suggesting single women may be starting too late to save for retirement and may never catch up. Since women tend to live longer than men, they need higher levels of retirement savings to fund a longer retirement.
These concerns are echoed in a second study by the BMO (Bank of Montreal) Retirement Institute, which states “common wisdom holds that we should start saving for retirement as early as possible. But the upshot of not following this advice could be even more perilous for singles than for couples.”
Singles are less prepared financially for retirement than married couples, and single women have an estimated retirement savings “deficit” over twice as big as that of their married counterparts.
What can you do to close the gap? Start now by contributing 10 to 15% of salary per year to retirement accounts, track your cash flow to avoid overspending, and consider hiring a financial planner to give you professional guidance.