When it comes to retirement planning, women start out at a disadvantage thanks to an earnings gap that creates disparities in everything from Social Security to 401(k) balances. Women also live an average of five years longer than men and are more likely to take time out from the workforce, which means that they’ve got to stretch fewer dollars over a longer period of time. And younger women face one more obstacle to saving for retirement: They’re more likely to have student loan debt than their male peers.
The result is that women are now 80 percent more likely than men to be impoverished at age 65 or older, according to a recent report by the National Institute on Retirement Security, Shortchanged in Retirement, The Continuing Challenges to Women’s Financial Future.
In addition to those hurdles, many women are now often planning for retirement on their own. For the first time in the history of the United States, there are more single adult women than married women. The shift reflects a variety of social and economic changes and is likely to continue as young women grow more educated, more independent and less convinced of the necessity of marriage.
Non-married women are the most likely to consider themselves behind when it comes to planning and saving for retirement, according to a recent report by Prudential. But even women who are married now may find themselves single in retirement due to divorce or their longer life expectancy. Fewer than one in four women who live past 75 have a spouse who can provide them with care.
Of course, it’s not impossible for single women to successfully save for retirement. By some measures, women are already besting men in spite of that earnings gap. Eight in 10 women earning $50,000 to $75,000 participate in their employers’ retirement plan, compared to just six in 10 men, Vanguard reports.
Here are some important tips on how to make sure you’re financially secure in retirement, whether you’re in a relationships or not:
1. Build your safety net. Even before you start saving for retirement you’ll want to have set aside at least six months’ worth of expenses that can cover you in case an emergency pops up or you lose your job. You should also look into purchasing disability insurance to protect your income in case you’re unable to work, even temporarily. “You don’t have a spouse’s income to fall back on,” says Ronald Rogé, chairman and CEO of R.W. Rogé & Co. in Bohemia, New York. “The last thing you want to do is create debt or have to tap your portfolio at an inopportune time."
2. Save more for retirement. The easiest way to build a bigger nest egg is to start saving earlier and to put away more money. While planners suggest that most people save 10 percent to 15 percent of their salary for retirement, single women may want to shoot for 15 percent or more. If that’s not feasible for you right now, start by putting away at least enough into your 401(k) to get your employer match. Then increase the amount you contribute every time you get a raise, so that you won’t feel the sting as much. If your company doesn’t offer a 401k, or if you’re already maxing it out, open an IRA as well.
3. Plan on working later. Adding a few years to your working career can help offset the longer lifespan of women, and help make up for any years that you stepped out of the workforce to care for children or parents. Plus, working longer means you can put off collecting Social Security or tapping your nest egg, making it more valuable when you finally do need to rely on that cash.
4. Get professional help. Women are sometimes less confident than men in their own financial abilities. Working with a planner can give you a boost in confidence, as well as a detailed plan with steps to follow to achieve financial security. Studies have shown that savers with a written financial plan feel better about their money situation and are more likely to meet long-term goals. You may be able to get free financial advice through your work benefits. If not, search the National Association of Personal Financial Advisors for a local fee-only planner that specializes in planning for women.
5. Be smart about Social Security. Social security makes up half of the income of unmarried retired women, compared to just 30 percent for men. Make the most of your benefit by putting off making a claim for as long as possible. Every year that you put off making a claim, your benefit increases by 8 percent. “Women have a better shot at breaking even if they wait, since they live longer,” says Eleanor Blayney, consumer advocate for the CFP Board. “So you miss those first few years of benefits, but you’re compensated over your longer lifetime.”
Related: How to Retire Comfortably While You’re Still in Debt
If you’re divorced but were married for more than 10 years, you may be eligible to file for benefits based on your spouse’s earnings.
6. Consider long-term care insurance. Single retirees often have higher long-term care expenses than their married peers, since they need to hire someone to do many of the tasks that a healthier spouse might take care of. This year the cost of full-time help for household chores or a full-time home health aide is around $46,000.
You can prepare for those costs by purchasing long-term care insurance. Premiums aren’t cheap, but the earlier you purchase the better rate you’ll likely get.
7. Set up an estate plan. Since you don’t have a spouse who automatically inherits your assets or can make decisions on your behalf, you’ll want to create legal documents now that lay out your wishes for your final days. Work with a lawyer to create a living will and decide now who will have power of attorney if you’re unable to make decisions, and who will serve as executor of your estate. If you haven’t made your wishes clear, a judge will appoint someone to handle these tasks.