Fidelity Research Reveals that Despite Long-Term View, Many Single Women Are Not Taking Proactive Steps Today to Plan and Invest for the Future
New research exploring the financial planning and investing habits of single women – those who have never married, those who have experienced divorce, and those who have outlived a spouse – finds that many may need to take a more proactive approach to growing and protecting their finances. Fidelity Investments’® Single Women & Money Study finds that while the overwhelming majority of single women (97 percent) believe it is important to be engaged in managing their money, three factors may be holding them back from taking action: underestimating their knowledge and experience, neglecting to plan for their financial future and saving too heavily in cash.
“Women have more financial earning and decision-making power today than ever before,” said Kathleen Murphy, president of personal investing at Fidelity. “And yet, too many limit the benefits of that power by shying away from taking control of their financial futures. As more women are staying single, and others are taking on sole financial responsibility through divorce or outliving a spouse, it’s critical that women be actively involved and invested in the financial choices that can enable them to live the lives they deserve.”
Single Women Question their Financial Acumen
Despite the fact that single women like having sole control of their finances, their confidence slips when asked about core financial topics. Single women are less likely to consider themselves knowledgeable than other demographic groups when it comes to saving for retirement, creating a financial plan and investing. This perception may be holding some women back from taking the necessary steps to secure their desired financial future.
While most single women associate their finances with positive sentiments like security, peace of mind and being in control, they also see their finances as a cause for stress and worry, more so than their male counterparts. Overall, one-in-three single women say they are concerned about their finances, compared to just one-in-five single men.
Single Women Think Long Term, but Miss Opportunities to Safeguard Their Future
Single women take a long-term view when it comes to their finances. The fact that they are thinking ahead is revealed by the worries weighing on their minds:
|Top Financial Worries||Single Women||Single Men|
|Affording to live comfortably in retirement||33%||25%|
|Paying down debt and still saving for the future||31%||24%|
|Being able to pay bills if faced with a job loss||31%||25%|
While single women may be thinking about their long-term goals and the financial challenges they may face along the way, most still aren’t preparing to meet these challenges by taking steps to curb their spending, reduce their debt, and prepare for a job loss. In fact, when it comes to day-to-day budgeting, nearly half (48 percent) admit they tend to spend without thinking about the long term.
Furthermore, single women are the least likely demographic (28 percent) to have a comprehensive financial plan in place to help them set savings goals and navigate paying down debt. And, while they worry about unexpected financial hurdles, nearly half (47 percent) have not put an emergency fund in place to cover three-to-six months of essential expenses.
Single women are also less likely not to have other long-term financial protections in place that can be critical in times of necessity. Across the board, women who have never married are the least likely to have a number of key safeguards in place, compared to those who have had a partner at some point.
|Have These Core Financial Safeguards in Place||% of Single Women Overall||% of Women Never Married||% of Divorced Women||% of Widows|
|Comprehensive Financial Plan||28||17||32||56|
|3-6 Month Emergency Fund||53||46||56||75|
Nonetheless, many in this group want to become better prepared, with more than half of singles (51 percent) either saying they need to spend more time on their finances or admitting they don’t spend any time managing their finances at all.
It’s Time for Single Savers to Take the Next Step
Despite concerns about being able to live well in retirement, single women may need to shift more attention to making sure their hard-earned savings are working equally as hard for their future. Eight-in-ten single women keep a portion of savings in cash, with more than a third (35 percent) report keeping 50 percent or more of their savings liquid. Many singles report wanting to keep savings on hand in case of an emergency, but single women are also twice as likely as their male counterparts to say they keep their savings in cash simply because they don’t know where to invest it.
“While keeping some savings easily accessible in cash to prepare for the unexpected is important, not putting enough to work for you in the market may mean missing out on potential growth over the long term,” said Alexandra Taussig, senior vice president of women investors at Fidelity. “Today, stowing away funds in a checking or savings account is not enough to keep pace with inflation. If you’re not investing your savings, you may be losing money over time.”
Approximately one-in-five single women shies away from investing out of fear of putting her savings at risk. On the flip side, fear also motivates many single women to invest their money, with 38 percent citing fear of not having enough money in the future as a top motivator to invest compared to only 25 percent of single men.
Divorced Women Feel More Financially Free, in Control
Major life events can often be a catalyst for action with finances. Among divorced women, the overwhelming majority said they feel more in control of their finances now that they’re divorced (84 percent) and have more financial freedom than when they were married (76 percent). Two thirds feel they are in better financial shape today, although nearly half (45 percent) report they have had to cut back their spending to save more post-divorce. One quarter either applied for or started a new job, while 18 percent improved their earnings prospects by working toward a new educational degree.
For some, feeling more financially secure came immediately. For others, this takes time: one third of those who have gone through a divorce said that it took more than a year to feel financially grounded; roughly one quarter report that it’s been more than a year and they still don’t feel secure.
Perhaps the most surprising finding from this group is that only five percent of women reached out to a financial professional for guidance as they were going through their divorce.
“Going through a divorce is as much a financial and emotional experience as it is a legal one,” added Taussig. “Building a support team that includes mental health, legal, and financial professionals can help provide a more holistic view and a better start to the next phase in life.”
When asked what financial choices they would have made differently in their marriage, divorced singles said they wish they had saved more and better educated themselves about how to invest for the long term.
After Losing a Spouse, Widows Share Wisdom
Widowed women are more likely than any other group surveyed to say they feel confident about their finances and in control of their money.
More than half of widowed women say their spending and saving habits are excellent and they have a budget that keeps them on track. They also feel more knowledgeable when it comes to financial topics like setting a budget, paying down debt, creating a will, and saving for retirement. What’s more, while more than half of widowed women feel the same level of control over their finances as before they lost their spouse, nearly 40 percent feel more in control of their money now.
This positive financial outlook may be connected to early planning. Nearly two-thirds of widows say they had a financial plan in place prior to losing their spouse, and eight-in-ten of those women worked together with their spouse to build that plan.
When asked what financial advice they would give to others who may one day face losing a partner, the top five recommendations offered by widowed singles:
- Know where all important financial and healthcare information can be found
- Have a will in place
- Make sure beneficiaries are in place for all accounts
- Make sure both names are on mortgages, insurance policies and other accounts
- Don’t delegate financial planning – make sure that you and your partner work together
Best Practices for All Women to Keep in Mind
By making it a priority early to establish strong financial habits women in all life situations can be better prepared to reach their future goals. Here is a short list of best practices to get you started:
- Get into your financial front seat: know what you own, what you owe and what your goals are for your money to ensure that your investments are working toward the future you envision.
- Put financial safeguards into place, including a holistic plan that accounts for your individual situation and goals
- Take the next step from saver to an investor, making sure that you choose investments suited toward your tolerance for risk and time horizon to save.
- Make it a priority to check-in on your finances at least annually. Don’t hesitate to reach out to a financial professional to answer your questions and help create a comprehensive plan to help keep you on track to meet your goals. AspirePFS professionals are available to help at 9999 312 868 or firstname.lastname@example.org—whether you’re a current client or not
Article Credit Fidelity.