Being single comes with certain perks. You get to live by your own rules, and you don’t have to endure the struggles and conflicts so many married couples face. But when it comes to finances, being single can put you at a major disadvantage. For one thing, you need to have more emergency savings on hand than someone who’s married, as there’s no other source of income to fall back on if you lose your job or fall ill.
While married couples have the potential to save twice as much, they don’t typically spend twice of what singles do. A Single person’s living expenses are not likely to be exactly half of that of a couple’s, but more likely 70%. Therefore, Singles must make every effort to maximise their retirement savings, especially when they are at their earning peak. Instead of splurging, they must put their high income to work for them.
Singles do have a secret advantage that tends to level the playing field. If they’re not raising children, they have far more opportunities to save during their 30s and 40s, when couples are typically up to their necks in dirty diapers, education costs and monster home loans. Single parents have greater financial burdens than two-parent families, and childless couples have the most opportunities to save.
Singles must budget for higher medical and living expenses post-retirement. Single individuals should also plan for higher health care and living expenses when planning for retirement, as it relates to having help in the home or having to live in a retirement community later in life.
One of the most practical ways of ramping up savings would be by cutting down on housing costs. While you can’t necessarily score a smaller house or apartment for half the cost of a place better suited toward a couple, you do have options for saving money on housing expenses. A smaller place might seem cramped if there’s another person you need to share it with, but if you’re on your own and want to ramp up your savings, start by downsizing your living space.
You may not need life insurance if you’re single without dependents, but that doesn’t mean you’re off the hook when it comes to estate planning. You should still create a will and name your power of attorney and beneficiaries. Without them, you have no way of dictating where your assets will go in the event that you’re not around to make those decisions yourself.
For health care and property, choose someone to have appropriate powers of attorney. For some childless singles, finding the right person is difficult, but there are professionals who can perform this role if there’s no one else reliable.
While being single might hinder you financially, it also gives you the opportunity to take control of your finances without having to seek approval from anyone else. This means that you have the option to invest your money as you see fit without having to take another person’s feelings or concerns into consideration. You may need to work harder to retire in comfort, but when you do, you’ll know that you did it all on your own, and that’s something to be proud of.