5 Ways Being Single Can Cost You More
Originally posted: 15-AUG-22 11:53 ETBy Jeanne Sahadi, CNN Business
(CNN) — There are a lot of benefits to being single. Among them: You can make the decisions in your life without compromise.
But being single can cost you more in expenses, savings, and benefits than being in a relationship with someone who shares life’s financial obligations.
The glaring exception, of course, is if you’re partnering with someone in debt, financially abusive, a gambler, or just a mooch.
But generally speaking, here are five ways solo flying can put you at a financial disadvantage and some ways to mitigate them.
You’ll probably pay more for the basics
To state the obvious, paying 100% of the bill to keep a roof over your head, the lights on, the fridge stocked, and the water heater working will be more than splitting the cost with a partner. This assumes that you and your partner are not exchanging a home and lifestyle that is more than twice as expensive as the way you currently live.
The same goes for making a down payment on a home, as well as buying furniture, appliances, and household items. Beyond sharing these costs, couples who choose to marry have another advantage: they often receive financial assistance in the form of money and gifts from their wedding guests.
You have no financial support
If you are single and you lose your job, you lose 100% of your income. If you live with a spouse or partner who also works, you only lose a portion of your household income.
In other words, you won’t have anyone to support you when you look for another job or try to start your own business. The same goes for any other financial disruption in life, such as a medical condition that prevents you from working.
That’s why financial planners often recommend that sole breadwinners have 6-12 months of expenses saved for emergencies in the event of job loss or large, unexpected expenses, as well as sufficient disability insurance that can replace a large part of your income if you have been sidelined for a long time.
You may incur additional charges when traveling in a group
Traveling solo can sometimes cost more if you opt for a group travel experience or retreat. This is because you could be hit with additional charges, which effectively means you pay a higher per person rate than each of the two travel companions who sign up as a couple.
It is unfair. “People often think ‘Why am I paying more for traveling alone?’ said Yves Marceau, vice president of G Adventures, which offers small-group adventure travel.
The reason, Marceau said, is that the per-person cost of the total package takes into account negotiated room rates based on double occupancy. Let’s say a negotiated rate is $200 a night. The package cost for each member of a couple assumes that each person will pay $100 per night for accommodation. That’s why solo travelers may be charged extra to account for the extra cost of using a two-bedroom.
“Most carriers don’t make money from the one-time surcharge. But they charge it to cover the cost,” Marceau said.
Some operators, like G Adventures, will offer to assign you a room with another solo traveler of the same sex if you wish, so you don’t have to pay more. But not all do, he says.
Another way to avoid the surcharge is to ask if there are single room occupancy options available.
Your social security benefits are worth less
Let’s say you never get married and never have children. When you retire, assuming you qualify, you will receive Social Security benefits based on your lifetime earnings. When you die, these benefits will cease.
But the social security benefits of your married or divorced colleagues will actually be more valuable because other family members – that is, their spouses, ex-spouses (to whom they have been married for at least a decade ) and, in some cases, children, may be entitled to an additional payment calculated as part of their benefits, not only during their lifetime, but after their death.
While your co-worker is alive, for example, the maximum they and their family can receive is “about 150% to 180%” of their full retirement pension, according to the Social Security Administration.
You are more likely to run out of money for retirement
When they retire, single women, including those who are divorced and widowed, have a retirement savings deficit three times greater than that of their married counterparts, according to the Institute for Social Benefits Research. employees.
Shortfall is a measure of how much extra money a person needs to cover basic expenses such as housing, food, transportation, clothing, and health care.
There are many reasons for this shortfall, including overall lower career earnings. But a key thing for those who are single and never married is that they don’t have the same opportunity to save as much as a married couple, said Craig Copeland, director of wealth research at EBRI. “As a single person, you can only save a certain amount, while two people can save more in tax-deferred accounts and each can reach the maximum.”
For example, in a two-income family, assuming they have access to employer-sponsored retirement plans, each spouse can save up to the annual maximum in their tax-deferred 401(k) plans at work. Currently, this maximum is $20,500.
Additionally, Copeland said, if a couple divorces, the spouses typically split the retirement savings they built up during the marriage.
Overall, he added, “[a couple] can save more.”
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