Financial Independence for Single Women: Trends and Strategies for Long-term Wealth

It is hard to imagine that in 1974 women were just being given the opportunity to have a credit card in their own name and secure a mortgage without a male co-signer. Fast forward 50 years and women have made huge financial strides. For example, single women now make up 17% of all homebuyers, compared to single men at just 9%, according to the National Association of Realtors (NAR). In addition, women are poised to inherit a large share of the $30 trillion that will be passed down from baby boomers, according to Investopedia. 

As financial considerations and options continue to shift and evolve, being mindful of personal priorities, goals and choices is paramount to success. Knowing where you are, where you want to be and what it will take to make it there requires focus and intentionality. Consider these strategies to ensure you’re set up for financial success now and in the future. 

READ: Becoming a Stay-at-Home Parent — Navigating the Pros, Cons and Financial Implications

Financial considerations for the single woman 

There is an abundance of financial advice and best practices for the traditional family. However, there are specific nuances to keep in mind if you fall outside this category. Establishing a plan based on personal goals and needs is essential in ensuring you are using your wealth to its full extent. Here are a few things to keep in mind:

• Identify your financial priorities. Whether you want to travel, buy a home, continue your education or are ready to retire, making a list of your short- and long-term goals and aspirations will help ensure you can achieve them.
• Establish a financial plan. Determine your current budget and any disposable income. Make sure you are tracking your current income and spending. Monitor your savings to make sure you have an adequate amount of emergency savings as well as an appropriate plan for any long-term savings goals. Carefully evaluate any current or future debt and how it will affect your overall cash flow.
• Address important financial commitments. Outside of your personal finances, plan for other potential financial commitments like caring for elder parents or family members, or upcoming major purchases.

READ: Securing Your Financial Future — Key Considerations and Questions for a Solid Plan

Create financial security with multiple income streams

According to the Pew Research Center, women have surpassed men and now account for more than half of the college-educated labor force in the U.S. Despite the increase in women attending and graduating from college, there is still a significant gender gap in pay that has remained relatively stable over the past 20 years. In 2022, women earned an average of 82% of what men earned, according to a Pew Research Center analysis. 

For these reasons, women may choose to have multiple streams of income to create financial security. Additional income doesn’t just mean a second job — it can come in many forms, including rental properties and passive income like investing in the stock market. If you choose to have multiple streams of income, it’s important to work with a financial advisor to ensure your financial plan encompasses these activities, and you are set up for success when tax season comes around. 

Saving for retirement should be a priority

Regardless of your age or marital status, saving for retirement should still be a priority. In the U.S., the average life expectancy of women is 79, which is six years more than men. For these reasons, saving for retirement is even more important to ensure you have a plan to live out your golden years in comfort. 

READ: What Does the Secure 2.0 Act Mean for Retirement Planning?

Here are a few steps to consider when starting a retirement savings strategy: 

• Determine your unique needs. A common standard for post-retirement income is 70% of the annual salary you made while in the workforce. The average retirement lasts about 20 years, so you should plan to fund at least two decades of post-work life. 
• Review your options. There are a variety of retirement plans to choose from that may provide tax benefits including:
  • 401(k) accounts 
  • Individual retirement accounts (IRA) 
  • Health savings accounts (HSA) 
• Set your goals and begin saving. Start the habit of contributing a small amount from each paycheck. Using an automatic payment, like a direct deposit into your account, helps you establish regularity and enables you to consistently save. 

Being financially independent is something to be proud of, and should be protected so you can fully maximize and enjoy what you have earned. Working with a financial advisor and understanding how you can best plan and save to support your goals will help ensure you are achieving that throughout your life. 

As a financial planner, Kim Gattis is responsible for creating dynamic plans for individuals, families and business owners. As part of the wealth team, she helps clients identify their life priorities, and assists them with formulating a plan to meet their specific needs while helping them find direction and meaning through the process of wealth accumulation, preservation and transfer. Kim joined UMB Private Wealth Management in 2009.