Money Advice

Single? How you should approach retirement planning

Posted by The Simply Money Advisors Team on May 16, 2018 10:13:00 AM

With more Americans forgoing or prolonging marriage, as well as an increase of divorces for those over the age of 50, many of you may end up retiring single. And while being single can have its advantages such as not saving for college if you don’t have children, there are some specific retirement planning challenges that single individuals may face. 

Here are a few areas you need to prepare for if you’re heading toward retirement single. 

Make saving a priority

Couples may have more discretionary income to save than singles. That’s why, if you’re single, it’s extremely important to make saving a priority throughout your career.

Aim for saving 20% of your take-home pay. Try saving all raises. If you can live off your current income stream, anything additional is a bonus.

Take advantage of tax-advantaged accounts 

This could include your employer’s 401(k) plan, a traditional IRA account, a Roth IRA account, even taxable investment accounts. All of these accounts have various tax structures that can help spread out your tax burden in retirement.

By creating a tax strategy with a tax professional and your financial planner now, you can potentially decrease the amount of taxes you will owe in retirement.

Understand your Social Security benefits 

If you’re single, it’s important you have a grasp on how to maximize your Social Security benefits. So, be sure to sign up for your “my Social Security” account

Signing up not only allows you to see your estimated future benefit and spot mistakes in your earnings history, but doing so also helps protect against fraud since no one else will be able to use your Social Security number to create an account. 

Review your insurance

Living on one paycheck means any sort of disruption to your income stream could be disastrous. Look into disability insurance. Either check to see what your employer offers, or consider buying an individual policy on your own. The same goes for long-term care insurance.

Develop a financial plan

Often, couples are more likely to plan their futures together, prioritizing their family and their needs. If you’re single, you may have different priorities, such as traveling the world or volunteering.

But even though you might have different goals than a couple, you still need to plan just as much as couples do. You still need to consider your ultimate vision for retirement and what your lifestyle will look like when you leave your job. We recommend working with a trusted financial planner (either a CERTIFIED FINANCIAL PLANNER™ or a Charted Financial Consultant®) to develop a personalized financial plan to help you reach your goals.

Select a Power of Attorney

If you have a spouse or don’t have any children, it can be a bit of a challenge finding someone you trust to handle all of your legal matters when the time arises. Speak with an estate planning attorney to help designate a Power of Attorney and Medical Power of Attorney.

Hope for the best, plan for the worst

If you do end up getting married at some point, it’s important to protect your financial well-being in the process. Consider a prenuptial agreement to protect your assets for the future.

The Simply Money Point 

Retiring single takes just as much planning, saving, and preparation as a couple. Take the appropriate measures now, so you can feel comfortable heading into retirement.

And to help you plan for retirement, we’ve launched “Retirement Resources,” a brand new educational section of our website! You’ll find free downloadable guides, online tutorials, and live events – all designed to educate you on retirement planning, how to select a financial advisor, Social Security, and more.  

Take me to Retirement Resources

Topics: Retirement


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