Are You Alone and Planning for Retirement? Retirement Planning for Singles

retirement planning for singles

A lot of retirement advice skews toward married couples, but what about those who are single? Many retirees today are divorced, widowed or never married. This means they are doing their planning for one, instead of for two, and that they’re relying on their own sources of retirement income, rather than those of a spouse.

The divorce rate among adults aged 50 and older doubled between 1990 and 2010, found researchers at Bowling Green State University. And roughly one in four divorces in 2010 occurred among people aged 50 and older.

Planning for retirement when single has its advantages, says David Blanchett, head of Retirement Research at Morningstar Investment Management.

“Someone who is single doesn’t have to prepare for as long of a retirement as a married couple,” he says. “A married couple is planning for the longest surviving partner, not just one person.”

But being single also presents unique financial challenges, such as not sharing the costs of housing, food or other expenses that will likely increase as you age — and that can be reason for concern.

Single workers over the age of 50 are less confident in their ability to fully retire in a lifestyle they consider comfortable than their married counterparts, at 6% to 12% respectively, according to the 10th Annual Transamerica Retirement Survey. And single women are even less confident, with only 2% responding they are confident about living a comfortable lifestyle in retirement.

That might explain why 42% of single workers over the age of 50 say they expect to work longer and retire at an older age than their married counterparts (32%), the Transamerica survey found. Yet, those who are single are also less likely to have a written retirement plan, at 10% compared to 16% of their married counterparts.

Single women have median retirement savings of just $35,000, compared with $70,000 for single men and $153,000 for married women, the survey found.

As a general rule, you’ll need at least $15 to $20 in savings to cover each dollar of the annual shortfall between your income and your expenses, according to CNN Money.

Here are three important questions to ask yourself if you’re single and planning for retirement.

1) What is my long-term health care plan?

“If you’re married, your spouse can take care of you if something happens — but what happens if you’re by yourself?” Blanchett says. “It behooves someone to look into these contingencies.”

If you have children, think about what role they might play in your health care as you age, he advises.

In addition, think about whether your home will support you as you age.

“You may want to consider looking into a nursing home,” he says.

Senior retirement communities can offer a lot of advantages, including socialization and staff to help with day-to-day tasks as needed, for those with health issues.

“It really helps for someone to know for certain if something were to happen they have this planned,” Blanchett says, adding that long-term care insurance can be especially useful for those who are single.

Long term health care is a category of health care for people who are physically or mentally unable to care for themselves. Long term care insurance can save you from spending hundreds of thousands of dollars on health care, possibly exhausting your retirement savings, should you need this level of care when you’re older.

2) What will be my sources of revenue in retirement?

Besides savings, guaranteed retirement income streams can be extremely important to a retiree.  Guaranteed income — income that you will receive for as long as you live no matter how long that is — can come from Social Security and some annuities and pensions.   “Someone who is single may find more of a benefit from Social Security or annuities,” Blanchett says.

  • AnnuitiesAn annuity, or insurance product that pays out income, allows you to make an investment in the annuity and then makes payments to you — giving you a dependable income stream during retirement.

There are many different types of annuities. The two main types of annuities are fixed and variable.

Fixed annuities guarantee a certain base of income per month, while the amount of income you receive from a variable annuity can depend on underlying investments.

So, for a variable annuity, if the investments behind the annuity are doing well one month, you would receive more money that month than you would when the investments behind the annuity are doing poorly.

If you have reached normal retirement age, which is 66 for people who were born between 1943 and 1959, you can access 100% of your benefits.

For each year after that, up to age 70, your benefits increase 8%, meaning you can access 32% more at age 70 than at age 66.

Nearly half (49%) of single workers over 50 say they expect Social Security to be their main source of income, according to the Transamerica survey. And 57% of single women were most likely to cite Social Security as their expected primary source of income.

On average, women have a longer lifespan than men, according to data from the Social Security Administration, giving them even greater reason to maximize retirement income by delaying claiming Social Security.  A woman turning age 65 today can expect to live, on average, until age 86.6, whereas a man turning 65 today can expect to live, on average, until age 84.3. And, one in four women reaches the age of 92.

If you are divorced, you may also want to explore claiming your own benefits vs claiming benefits based on your ex spouse’s income.  You may also want to consider claiming your ex spouse’s benefits when you are 62 and then switching to your own benefits when you read the maximum retirement age.

3) How will I spend my time in retirement?

“Think about how you’re going to spend your time,” Blanchett says.

Thinking about your day-to-day activities as well as bigger plans in retirement will help you determine how much you need to save, he says.

Single workers report they will need $300,000 to comfortably retire, and single women report less than single men, at $250,000 and $500,000 respectively, according to the Transamerica survey.

“If you’re going to be traveling to see your kids, grandkids or going out to eat with friends more that will all impact retirement costs,” he says.

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