Why Single Ladies Can’t Afford a Single Income

Why Single Ladies Cant Afford a Single Income

 

Single ladies, listen up! You CANNOT afford to rely on one income stream.

Okay, this is true for the gents too, and even couples, but because I’m speaking from my point of view here (and because most modern day couples already enjoy the benefits of dual income), this (tough) love letter is dedicated to my fellow single ladies.

 

It’s time to get bullish on your earnings!

 

No, I am not suggesting you go out and get yourself a sugar daddy to get your financial life in order. After all, a man is NOT a financial plan.

Your extra income stream – preferably streams, as in multiple – are up to YOU to cultivate. And yes, they need cultivating, whether you’re traditionally employed, self-employed, have children, or not.

 

Here’s why…

 

Single Women Can't Afford Single Income Stream

 

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In the 2014 Millennial Study from Wells Fargo, college-educated millennial women between the ages of 22 and 33 were found to earn an average of $63,000 while men the same age earned an average of $83,000.

 

With employers making retirement contributions based on salary, women are not only contending with fewer financial resources to spread between financial obligations and savings, their employer contributions to benefit plans and Social Security are also less.

 

Combine this disparity with the fact that women live longer than their male peers and it’s no surprise that over the long-term, women are experiencing financial crises.

 

The Long-Term Financial Crisis For Women

 

According to a report from the National Institute of Retirement Security, the income of women aged 65 and older is 25% lower than that of their male counterparts. By age 80, that gap widens to 44%. As a result, women over age 65 are 80% more likely than men to be impoverished.

 

 

Now before you assume “inferior female financial habits”, consider this data from a 2015 Vanguard study:

 

  • Women are 14% MORE likely to participate than men in their workplace savings plan.

 

  • Once enrolled, they save at HIGHER rates than men at all income levels.

 

  • Still men, in aggregate, have account balances more than 50% larger than those of women.

 

It’s not that men exhibit superior retirement savings behavior, it’s that their higher salaries translate into greater contributions from their employers and thus, higher balances.

 

So ladies, keep your savings supercharged and your investment habit strong, but PLEASE up your income!

 

The Long-Term Outlook for Single Ladies 

 

Beyond negotiating a raise at work, there may not be much you can do to increase your employer retirement contributions, but you can certainly cultivate additional income streams to fund your own savings and investment contributions.

 

If you’re going at it alone or looking to invest beyond your 401(k) plan, check out the super simple, low cost investing platform Betterment.com to get started.


All of this goes double for my fellow single ladies. Not only is the wage gap reflected in your present paychecks, it impacts your Social Security benefits too.

Earning less now means a smaller Social Security benefit in retirement. And being single, you’re already limited in how you can maximize Social Security.

Married individuals have the option of taking their own Social Security benefit or half of their spouse’s benefit if it ends up being more. They also have the option of taking half of their spouse’s Social Security benefit when they reach full retirement age – allowing their own benefits to accrue up to age 70 before taking their own higher benefit at a later date.

Neither of these options is available to singles.

Married couples also benefit by being able to put two people on an IRA (Individual Retirement Account) – increasing their annual contribution allowance while singles remain restricted.

Spouses who meet certain conditions can also put money into their partner’s IRA, deducting up to $11,000 on their joint tax return. Meanwhile, singles receive no such from benefit putting away money in support of someone else, nor can someone put away money on behalf of those singles who are unable to contribute to their own retirement accounts.

 

The Cost of Single Living

 

It’s not just retirement restrictions that make being single such a challenging financial reality. There are many higher costs that last a lifetime – like solo housing.

Sure, it can be fun to bunk with girlfriends for your first five or six years post-grad to save on rent, but sharing a bedroom after 30 with a non-romantic partner, even for a frugal gal like me, is not my vision of a “beautiful” life.

According to the Bureau of Labor Statistics, couples spend an average of 23.9 percent of their annual income on housing, while singles spend between 30.3 and 39.8 percent.

Singles also tend to be subject to higher prices on expenses like cell phone bills and travel, not to mention all the social costs singles manage on their own – hello wedding season.

According to a 2013 analysis by Lisa Arnold and Christina Campbell, with legal and private sector policies that drive up costs for singletons, the price of being single could be as high as $1,022,096 over the course of a lifetime for a woman making $80,000/ year.

 

 

Between the added cost of being single and the lagging earnings of women in workplace, the capacity for single ladies to set aside savings is severely restricted compared to their male and coupled counterparts. Hence my call to action.

 

Single Ladies Can’t Afford a Single Income – No Matter How High

 

Yes, we need to advocate for economic and social systems that are better designed to meet the needs of single women – after all, there are now more unmarried women than married women over the age of 18 in America. But while we advocate for those changes, let’s also be sure to advocate for ourselves by cultivating additional income streams, increasing our earnings capacity and fostering our financial independence.

The good news for single women is that they significantly out earn their counterparts who marry in their 20s. According to the 2013 Knot Yet Report, women without college degrees gain a wage premium averaging $4,000 a year if they delay or opt out of marriage in their 20s. For college educated women, that earnings premium jumps to an average of an additional $18,000 PER YEAR!

 

 

 

A high salary certainly has its benefits, but for single women who rely entirely on their own earnings to fund their cost of living, a higher salary alone is not enough. The job security of yesteryear is no longer, and single or not, having multiple streams is no longer a luxury. For single women especially, it’s a necessity.

Should single ladies lose their primary income stream, additional earnings streams, even those less substantial than their salaries, will allow for more time and flexibility to figure things out without having to rely on credit cards or other forms of high interest debt for support. Additionally, added income streams can increase the capacity for savings in the present.

This is particularly critical for millennial single women who are contending with record levels of student loan debt and salaries that, adjusted for inflation, are 20 percent less than what they were for the previous generation at the same age.

 

With comparatively fewer financial resources and higher living costs, cultivating additional income streams can help single women set aside more substantial savings sooner.

 

The earlier we single ladies start saving and investing, the more time we give our money to grow, and the more financial security we build up.

For example, if you start investing $500 each month at age 35 (which is already a little late to be honest), and that invested money generates an average annual return of 8%, by the time you reach 65 you’ll have roughly $680,000.

If you implement the same exact same strategy with the exact same return just ten years later, your ending balance will only be around $275,000.

That’s a $400,000 opportunity cost! A price tag no one, much less single women can afford.

So, fellow single ladies, let’s not be dependent on a single revenue stream, let’s not be victims of our comparatively lesser average earnings and let’s not succumb to the higher costs of singledom – let’s give ourselves the luxury of independence by diversifying and increasing our income through multiple revenue streams!

 

Learn to own your financial independence with the FREE 7-day Cash Confidence challenge!

 

20 responses to “Why Single Ladies Can’t Afford a Single Income

    1. Yes, and important to understand that the consequences of the pay gap are greater than what’s on the paycheck. It impacts retirement readiness too!

  1. I am so thankful for what I’ve learned over the last three years. Starting my blog and becoming a financial planner has changed my personal life. I literally think about how I want to get a prenup because I plan on making so much money that I don’t want my husband to automatically get if something were to happen. Five years ago, I would’ve been thinking about how someone else can take care of me. It’s incredibly empowering to learn how to take care of yourself financially. I think every young woman owes it to herself.

    1. Agreed, it’s not just increased earning capacity you get by being single throughout your 20s, it’s also more financial maturity.

    1. Yeah, I think that’s probably true for the majority of people I know, which is kind of crazy after everything we’ve been through post-recession. While the side hustle has definitely gained traction, I’m shocked it’s not more widespread when we all know things can change in an instant.

  2. That breakdown on the premium one pays for being single is fascinating. $1,000,000+? Crazy.
    Forbes had some article the other day on building a six figure freelancing business, and it basically said that the standard full-time job is becoming a thing of the past, and freelancing/independent contracting is becoming a more lucrative, secure avenue. So I think that supports the idea that multiple streams are more of a necessity than a luxury. The market is changing, and that can be a really good thing if you learn to adapt!

    1. Did you read the full analysis on the price of being single in the Atlantic? It was fascinating. I’m very interested to see what kind of future lies ahead, not only as more people fall outside the norm of the traditional family unit, but also as we see more people subsisting on freelance and self-employment. Being both single and self-employed, I find the lack of understanding and infrastructure to support how I live is infuriating.

  3. I’m going to play the devil’s advocate here. I’ve been single MOST of my adult life and have lived in mostly expensive cities. I’m 45 and had 7 years where I wasn’t contributing anything to retirement, and in fact I was losing money. And I’m still on track to save enough for retirement. While there are good points to be made, I don’t think we necessarily need to go running for the hills. The data is based in so many factors, lifestyle being one of them. I think it’s great we do have unlimited earning potential now and if we can explore that and fit that into our life, then that is great, but on the flip side is a lot of burnout and not taking care of ourselves. In any case, I just wouldn’t hit the panic button. Do the smart things when you can, obviously, and definitely learn to negotiate and ask for a raise or find a better job for yourself when you can, but don’t panic! 🙂

    1. So much I agree with, but I also think your savvy is an exception. The stats on average retirement savings (for everyone, married or single) are really disheartening, and even basic savings to cover emergencies are largely insufficient. Between that, the new job market, longer lifespans and the evolving retirement landscape, I think diversity of income is becoming more critical than ever.

  4. I’ve had some fascinating conversations with my girlfriend and her friends who are all graduating from surgical training. As new doctors almost none of them had negotiated their starting salary. I was totally stunned and asked them why because every male in finance I knew would have been aggressive about negotiating. They said they felt bad, didn’t want to lose the job, wanted to show they could perform well first, etc. Did some more research and there’s a major difference in men and women when it comes to comfort in negotiating raises, higher starting salaries, etc. Hopefully women can be empowered to ask for what they’re worth and not what their employers give them

  5. Salary negotiations and retirement… two of my favorite subjects and the hardest to do confidently and fully understand. Thanks for bringing the facts to light, Stefanie! It’s time to get that baseline up and start saving for our old, fabulous, retired selves! 😉

  6. Great post Stefanie.

    Something I wouldn’t have thought of for myself but I frequently think about for my single sister. Amusingly it wasn’t because of the money…. it was more the fact that she doesn’t have kids so has time to side hustle… she stopped and I ask myself why she would…. but your post makes a better case for it then. Me just saying you should do it because you have the time.

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