How to beat the ‘single woman’ penalty

The popularity of Taylor Swift did not escape one male journalist this summer, who jumped on the bandwagon and called the global sensation and seven-time platinum album artist a bad role model for younger girls and women. Why? Well, she is apparently guilty of the triple crimes of being 34, unmarried and child-free.

While the comment was much-derided, what it did highlight is the emerging role in society of women who willingly forgo coupling and a family, and how it can cost them. Swift clearly has not let her unmarried status hold her back professionally or financially. But among the less musically gifted, the realities of being a woman doing it all alone can be more of a struggle – from owning property to investing and preparing for retirement.

The motherhood penalty – where women with children are held back in their careers and personal finances when they start a family – is well known. But as a growing number of women choose to avoid marriage and a baby carriage, shouts about the single woman penalty are becoming louder.

The stats are clear. In 1991 – the same year the World Wide Web was launched by then CERN scientist Tim Berners-Lee – 56 per cent of UK women aged 20 to 39 were married, according to the Office for National Statistics. Fast forward to 2021 and that had tumbled to just 31 per cent. Is the advent of the internet to blame for women’s increasingly single status? Probably not. Michelle Leivars, mentor for female entrepreneurs, says: “Societal norms have changed in recent years and studies have shown that there is a real shifting pattern in lifestyle choices.”

Previously for women, the natural progression was to leave school, get married and have children. “It was almost an expectation that was pre-written out for us as a rite of passage,” says Leivars, “but women are now focusing more on their education following school, their careers and becoming financially independent.” It is the final part where single women face their biggest battle, and it starts in the job market. While more are working – teetering around record highs – women are still in typically lower-paid work, known as the five Cs; cleaning, catering, clerical (admin), cashiering (retail) and childcare, making spare income to save or invest harder to come by. 

Even if they do make it to the professions, single women face quite bizarre promotion discrimination, limiting their pay progression. A study published by the European Group for Organisational Studies in 2022 found single, professional, analytically-talented women were viewed as “least suitable for a leadership promotion compared to identically-described single men, married men and women”. They were seen as lacking the people management skills needed for leadership and therefore promotion. Being more qualified didn't help. A second study in the same research found single women with MBAs were the least likely to advance post-graduation compared to all other gender, marital status, and talent groupings.

“The combined studies unveil a novel penalty directed at young, single, analytically-talented women professionals in their early careers for their perceived incongruity with gendered expectations of masculine and feminine leadership,” the study’s authors said. Smart single professional women are being held back for being smart and single.

The housing ladder meets a glass ceiling

With lower-paid employment, barriers to more lucrative roles, or both, single women are not living the freewheelin’ high life their coupled-up and procreating peers might imagine. For example, figures from thinktank the Women’s Budget Group found a significant gender gap when it comes to housing affordability. 

Average rents in England take up 36 per cent of a woman’s median earnings compared with 26 per cent of men’s. For a two-bedroom property in England, this is 40 per cent versus 28 per cent – jumping to 62 per cent and 49 per cent in London. In terms of home ownership, the median home in England costs more than 11 times women’s median wages but only eight times for men.

Ignacia Pinto, senior research and policy officer at the Women’s Budget Group, says: “We know being single has a price to it, and because women earn less on average than men, it’s even higher for them.” Three in five single women say living alone has a negative impact on their finances, according to a 2023 report by AJ Bell.

No nest? No nest egg

Single women’s earnings and costs disparity also leaves them with less in emergency savings, less in their pensions and less confident about paying off their mortgage pre-retirement – if they can even get on the housing ladder solo. Single women have around £3,600 stashed away in emergency savings versus just shy of £4,600 for single men, AJ Bell’s report found – leaving solo women more vulnerable to financial shocks. This lack of savings also has a long-term real-life impact. When questioned, single women are less likely to feel confident that they will pay off their mortgage by the time they retire: 63 per cent, compared to the average of 75 per cent for married people.

And when it comes to retirement, single women have an average of just more than £29,000 in their pension, the AJ Bell study found, compared with already low £32,000 on average for all women. Single women also have less than single men – despite needing more as women live on average four years longer. Asked about whether their pension will be enough in retirement, just a third of single women are confident they can live comfortably on it compared with 56 per cent of married people.

Their fears are well-founded – on average, single male pensioners receive an income 10 per cent higher than their female counterparts, at £286 a week versus £259 a week, AJ Bell found.

How to beat the penalty

The attitudes that need to change are both about women and among them. Regular investing – for example in a stocks and shares Isa – is a key way to increase wealth. Yet single men are more likely to invest than single women, official statistics show, at 13 per cent versus 10 per cent. 

Men arguably have more disposable income to invest, but Annabelle Wiliams, author of ‘Why Women Are Poorer Than Men’, says “a big part of it is fear”. She says: “Women are often put off by the prospect of losing money, and it’s understandable they might feel this more keenly than men, given that fewer women are in the highest paying jobs.”

While financial services providers' focus on risk is there to protect consumers, Williams says the sector “needs to get the message across that there are other kinds of risk, like shortfall risk – not meeting your money targets – which is especially relevant for women since we live for longer”. 

Mary Green, founder of Rosewood Financial Planning, advises her clients to take on more investment risk while they are young and their investing timeline is long, “to give your money the most time in the market and allow the magic of compounding to really benefit you”. This often means investing more in shares or funds that buy shares, because, while these investments are higher risk, they reap the biggest rewards for investors over time. A basic index tracker fund that follows a well-known index such as the FTSE 100 or S&P 500 is a cheap and simple way to begin investing without the need for specialist knowledge or lots of time-consuming research.

With interest rates now higher than the record-low era witnessed for all of the 2010s, even saving into an ultra-safe cash Isa or high-interest savings account can be lucrative. Many are offering 4 per cent or more, and would service single women better than sitting with the ranks of savers with £253bn in bank and building society accounts paying little-to-no interest.

Lifetime Isas, or Lisas, come in both investment and cash varieties. They can be used either to help with a first-time property purchase or to save for retirement for those who already own a home. Anyone between 18 and 40 can open a Lisa and can put in up to £4,000 each year until age 50, which counts towards the £20,000 annual Isa allowance. The government will add a 25 per cent bonus to your savings, up to a maximum of £1,000 per year. 

To boost their retirement confidence, single women can take proactive steps such as increasing contributions to their pension schemes to great effect – even with barely noticeable sums. Wealth manager Fidelity’s online ‘Power of Small Amounts’ calculator, for example, shows how savers who make minor savings tweaks can have a significant impact on their final retirement pot. For a 25-year-old earning £28,765 (the average salary for women in the UK), increasing her contributions by 1 percentage point – less than £6 a week – could lead to an extra £74,000 in retirement. Increasing contributions by 3 percentage points, or £72 a month, could lead to £222,100 more by retirement.

Is your pension on track? Find out with our free online pension calculator

What providers need to do

Financial services providers have a changing role to play in single women’s lives too. Since its inception, the sector has had a bias in the make-up of who works in it and who they talk to – men for other men, or women only as the wives of clients. But as society shifts this is starting to change. Two-thirds of Fidelity International’s advice team are female advisers, for example. The company says they provide tailored financial advice to “cater for women’s unique needs and foster a supportive environment where women feel confident to invest”.

Maxine McCreadie, personal finance expert at UK Debt Expert, says more financial services companies need to give advice that “addresses the challenges women face such as longer life expectancies and wage gaps, to help women achieve better financial outcomes”. 

Single, child-free women would welcome better designed help. But they are no strangers to overcoming struggle in a world not made for them, they just need to apply this tenacity to their personal finances. Olivia Stefanino, creator of Money Types, which helps users work out their attitude to money, thinks single women need to “embrace the idea of stepping into their sovereignty” when it comes to money.

“This means they decide how their life is going to look, and they put themselves in the driving seat rather than in the reactive seat where they ‘get what they’re given’ which of course may not be what they deserve,” she adds.

Contrary to being a bad role model, single women, it seems, should be a bit more like Taylor Swift when it comes to their money management. Stefanino says: “We need to let go of the idea we taught children that at some point Prince Charming will come to the rescue – single women need to learn that they are their own Princess Charming.”