Women Who Are Single – How different should your Financial Planning be?

After over a decade of service as a financial planner, I have developed a group of women clientele who are single.  As the clientele of such profile grew in numbers, my appreciation and understanding of their unique financial situation has grown as well.

Often, I feel that most of my female clients who are single do not want to be seen or treated differently because being single does not necessary mean that they enjoy an inferior lifestyle.  I totally agree with this point of view yet when it comes to planning their finances, I would bring up to them that their financial planning has to be different.

To begin with, most single ladies enjoy a higher level of financial freedom (read: shopping, spending and holidays) than someone like me (married with young children) due to lesser commitments.  There is also a less urgent need for life insurance as providing for elderly parents is usually the only reason for insuring their life.

With the exception of those who are the only child and is expecting to inherit a property from their parents, the main financial goal for most single ladies is to purchase a self-use property which serves as an “anchor” for the future.

In short – Independence, Freedom and a Place to stay.

Being Independent also means Not Being Dependent

I did not start out thinking this way but after some time, the pattern that emerges is quite clear. The financial plan that most female who are single wants (or at least what my female clients wants) is to ensure that they can remain independent, free to make choices without financial constraint and most importantly, have a place that they can call their own.

When it comes to financial planning, every woman’s unique personal situation will require the plan to be customised.  Some are self-employed while others could be working in industries with a long and stable outlook.  Some build their social networks around their faith while others have theirs around a hobby or interest.  Some still have parents to provide for, others have younger siblings to worry about and in addition, a rising topic of concern – planning for their pets.

Amongst all these differing profiles, there is a basic fact that all women need to be aware of: Women in Singapore are expected to live long (life expectancy is 84.9 years in 2015) but they will also suffer from ill health for a long period (last 9 years of life with ill health).  The problem for most women who are single is that there is an expectation that there is no one to share the load with, especially in the later years. This is where there must be a focus on certain financial planning needs for women who are single.

In my opinion, these are the 3 important planning priorities for women who are single.

Priority 1:  Insure Health First, Life Second

Not having dependents does not mean that there is no need for insurance, it just means that what we insure changes. Generally speaking, insuring against the loss of health is more essential than insuring against the loss of life.  The goal of insuring is not to benefit and provide for someone else, it is to ensure you won’t be a burden and become someone other people have to provide for.

In my opinion, a comprehensive planning should have these 3 components:

a. Hospitalisation Insurance

We don’t know what we don’t know.  It’s not just a way to describe the state of “unconscious incompetence”, it is also a very appropriate way to describe health problems.  When it some to health problems, we don’t know what we might have, we don’t know when it might happen and we don’t even know if we will have any health problems.  Yet, not knowing does not mean that we can or should ignore the risk.

You must not allow yourself be caught in a financial jam due to medical bills.  However, by having hospitalisation insurance will remove this unknown financial risk and free up your savings for other goals (see priority 2).

b. Women’s Insurance (also commonly known as Lady’s Insurance)

These type of insurance plans are designed specially for women to encourage proactive health management.  A key feature is that it usually comes with a complimentary comprehensive medical checkup (once every 2 years) that ‘forces’ you to take care of yourself and get your health checked despite the busyness of life.  Early detection of any illness is important and what is even more valuable is having the money to pay for early medical intervention.  Women illnesses such as early stage breast cancer are also covered under this type of plans to ensure funding support.

c. Critical Illness Insurance

Being single also means that there is only one source of work income – yours.  This can potentially create a big financial problem when you are unable to work for a period of time due to a critical illness.  There are basic everyday cash needs, additional medical expenses not covered by hospitalization insurance and possibly even loan repayments that still have to be met every month.

An illustration is where you are the sole owner of a mortgage loan and there is no one to share in the loan repayment.  The worst possible thing that can happen is to lose both your health and house at the same time.  Hence, at the very least, ensure that there is sufficient critical illness insurance to provide for such essential expenses for a period of time.

Priority 2:  Make having guaranteed lifetime income a priority (after you have your property)

My female clients often feel a sense of “financial vacuum” after they purchased a property, usually around the age of 36 to 40.  Before buying the house, there is a goal to save for.  After buying the house, the question is “what’s next” and there don’t seem to be anything tangible to aim for.

Planning for retirement is usually not appealing because work allows for engagement and networking so there is actually more motivation to keep working than to stop working.  However, what often appeals to women who are single is the option to reduce or “dial down” the work load and have free time to do what they want, when they want to do it.

In fact, some of my female clients think of their future in blocks of 2 or 3 years.  If something appeals, most will work and when their energy are exhausted, most wants to take weeks or even months off before moving on to the next project or opportunity.

This is where having a guaranteed income that pays for life is so important.  Ideally, the income should be enough to provide financially for all the basic needs so that you can have the freedom to take a break at any time.  And if you choose to work, the salary can serve as an extra cash flow for personal well-being and enjoyment.

One of the most effective ways to have a guaranteed income for life is through a guaranteed life annuity plan.  You can use this Guide to Life Annuity (For Women) which I’ve created to help you understand how a life annuity can help you generate a guaranteed income for life.

(NOTE: Get our Guide to Life Annuity For Women to help you understand how a life annuity can help you generate a guaranteed income for life. Get your copy here)

Priority 3:  Have a Long Term Care Plan

This is the most difficult to discuss and plan because we are talking about a period where we are no longer physically independent.  This is especially difficult for a women who is single to think about because all the planning thus far has been about keeping the sense of independence.

In terms of financial planning, having a Lasting Power of Attorney done up as well as sufficient long-term care insurance to provide the necessary financing is essential.  While it may not be possible to always be physically independent, being financially independent can still be maintained with sensible planning.

Protect Yourself – Make Sure You Have Enough Income Always

Having a guaranteed monthly income is probably what will provide the most financial comfort but it is often a neglected part of financial planning for women who are single.

Perhaps, there is a confidence that they can always work.  Or, the feeling that because they are single, expenses are likely to be low so there is no urgency to plan for having income.  For some who believes in planning for the future, they have no idea how to kick-start their planning with the goal of having an income for the future.

Just like everyone needs to have some form of medical insurance, I believe it is essential to have some form of life annuity and this is especially so for women who are single.  If you would like to get started on annuity planning, download this Guide to Life Annuity (For Women).

This year’s message for International Women’s Day is Be Bold For Change.  Change happens only when courage is present.  May all women, single or otherwise, take control and live our financial lives with confidence!

Article by Lee Meng, FChFP

Email: meng.lee@proinvest.com.sg

<strong>Lee Meng </strong>(FChFP, AFC)
Lee Meng (FChFP, AFC)Executive Financial Services Consultant

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