Singles and Money: Flying Solo Financially

“In 1950, only 22 percent of American adults were single. Today, more than 50 percent of American adults are single, and 31 million—roughly one out of every seven adults—live alone.”
-book description for Eric Klinenberg’s Going Solo

Foot-Prints-379122.jpgHas Single Become the New Married?

The U.S. is becoming a nation of single people. Whether unmarried, divorced, or widowed, more Americans are living alone, and functioning as individual financial units; they are households of one. And they don’t do financial planning with a spouse.

It’s a demographic trend that’s been consistently building for the past 50 years, but still mostly under the radar of most Americans. The reasons are many:

  • Fewer people are getting married.
  • People are getting married at a later age than 50, 30, even 20 years ago.
  • As the divorce rate has climbed, fewer people are staying married.
  • The average age of widowhood is just 57, yet 57-year old women lives an average of 26 more years.

The shift is profound and dramatic. A few citations to illustrate:

“Americans are now within mere percentage points of being a majority single nation: Only 51% of adults today are married, according to census data. And 28% of all households now consist of just one person — the highest level in U.S. history.”
– Eric Klinenberg,

“23.8 percent of men, and 19% of women, between the ages of 35 and 44 have never been married. Tick back…to the people between 20 and 34​ and the numbers are even more startling: 67% of men and 57% of women in that group have never been married. When you total it all up, over half of the voting-age population in America (is) single.”
– Jonathan V

“In 1960, 65.2% of taxpayers were married, filing jointly or separately, and 34.8% were single filers or unmarried heads of households. Fifty years later – the most recent year analyzed on the IRS website – 61% of filers were single and just 39% were married.”
Newsmax, May 5, 2013.

“Over the past 10 years (since December 2002), the number of singles is up 20.4 million, four times the increase in the number of married persons, i.e., 5.2 million!”
-Dr. Ed’s Blog, “Demography and Debt,” Jan. 15, 2013

Saving-for-singles.pngThe Financial Challenges of Single Households

Single-person households have most of the same financial tasks as married households. They have to earn income, secure housing and transportation, manage debt, protect against loss, and save for the future. But do they save as much?

According to advisor and syndicated radio host Ric Edleman, “Many singles are spenders, not savers, because they often don’t feel the same need to save as those who are married with children. (After all, no kids means no college or wedding costs.)” Research shows that singles tend to spend more money on restaurants and entertainment, and start saving for retirement later.

Singles can find it harder to build momentum in saving and investing. Living alone means that housing and utility costs aren’t shared, and there is only ever one breadwinner. Singles also can’t choose which spouse has the better health insurance plan, or rely on a spouse to pay the bills while the other starts a business.

On the bright side, singles are protected from a spouse’s overspending, gambling, poor credit, outstanding debts, or other financial failings.

While all households must balance income and expenditures, there is one significant difference: singles have to develop a non-standard financial support system.

Most married households have a default financial support system: their spouse. According to the Tax Foundation, 73% of married households have both spouses earning income. In most situations, spouses are partners, contributing to the same goals, assisting each other through degree programs, job searches, business start-ups, and financial ups and downs.

When emergencies strike, medical, or otherwise, the spouse is the primary contact person. And if a married person dies, even if they don’t have a will, probate and estate laws provide templates for distributing assets to a surviving spouse and children.

In contrast, a single household has no default support plans. If he/she encounters financial or physical distress, who (or what) is there to help?

Establishing a Financial Support System

Who’s looking out for you? A financial support system for singles should be comprised of trusted friends and professional guidance. In lieu of a spouse, singles may need others who will check up on them, and if necessary, make financial and health-care decisions if they become incapacitated.

The checking-up issue is often overlooked, but as one single said to Edelman, “Suppose I have a stroke and cannot reach the phone. Who would know?” It is helpful for singles to explicitly ask co-workers, neighbors, or acquaintances to contact them if they suddenly vanish from work, the gym, or church. Of course, parents and other family members may fill these roles as well, but proximity matters.

In addition, singles should establish relationships with financial professionals who can act to protect their interests. A trusted advisor, accountant, attorney, and insurance agent should be aware of the individual’s financial issues and aspirations. Just like a neighbor who agrees to check in occasionally, an advisor may be the only one who’s reviewing a single’s financial condition on a regular basis.

Assembling the needed support system is more than people; it also involves contracts. Because there is no default protocol for the care of incapacitated single adults, it is prudent to verify that someone is willing and ready to serve as a representative on their behalf. This information should be recorded in durable power of attorney agreements or health-care proxy documents.

There are two basic categories of contracts: legal and insurance. Durable power of attorney agreements for both financial and health-care decisions should be in writing and regularly reviewed. If a single adult has accumulated assets, beneficiary designations and disbursement instructions should also be put in writing, and kept someplace where the appropriate parties have access.

We can’t ever “plan” for an unknown future, but we can prepare! Here are some steps

Unless a single person can afford to retire, a strong disability insurance program is a vital support item. With only one source of income in the household, any disruption could be devastating – and a worker’s compensation program is not enough; singles must make comprehensive disability coverage a priority.

In addition, singles should weigh the costs and benefits of long-term care insurance policies or even a life insurance policy.  While they may not have financial responsibilities to a spouse or children, a life insurance policy with a long term care rider, a disability rider, and/or “living benefits” that can provide flexible protection against a variety of challenges and long-term health issues. These insurance contracts can provide an essential safety net for singles, with cash value that can be borrowed against or used in multiple ways.

Preparing for the inevitable. Even though singles fly solo financially, some may still have responsibilities to children or other family members. A family dynamic makes legal documents and insurance benefits even more critical. Some singles might leave some assets or a modest insurance policy for final expenses. Others have heirs they wish to leave an inheritance to. And other singles may not have children, but may desire to leave legacy gifts to fund the charities, institutions, and passions that inspire them.

Financial planning for singles? We think it’s impossible for anyone to “plan” for an unknown future, but singles can do their best to “prepare” for anything, and especially, to prepare for a future of sustainable wealth. Singles and money can make a great long-term match.

Checklist for Singles with Assets:

Make sure you have…

  • A network of friends, acquaintances, or local family to keep tabs on your physical condition and assist when needed.
  • Professional legal and financial assistance to help you manage your assets.
  • Durable power of attorney documents for finances and health care.
  • A legal will.
  • A good disability insurance program (not an employer program that only covers “on the job” injuries.)
  • Provisions for long-term care.
  • Properly executed beneficiary designations.

Single? You don’t have to figure out your finances alone! We work with our clients in multiple ways. Some clients come to us knowing what they want, ready to take action. Perhaps they’ve been referred by a friend we helped with an alternative investment (outside of the stock market). Or maybe they’ve heard Kim Butler’s Palm Beach Wealth Builder Club interviews  and they want to set up an “Income for Life” cash value account. If this describes you, we can help you move towards your goals today.

Others come to us for comprehensive advising. They want to do an in-depth exploration of their personal economy. For these clients, we offer the Prosperity Pathway. The Prosperity Pathway is a five-session, fee-based, proprietary process that will help you discover and apply the Principles of Prosperity to your life and finances. This allows clients to choose financial strategies and move forward with confidence! To learn more about our favorite financial strategies, read our Ultimate Guide to Financial Planning Myths

To explore working with us in either capacity, simply contact us to set up an initial complimentary consultation. You can also explore more about our philosophy by reading one of Kim D. H. Butler’s books.

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