The Reality of Retiring Single

The Reality of Retiring Single


Proactive planning can help you be ready for whatever challenges you may face in retirement and that’s especially important if you’re single.

The Reality of Retiring Single
Cathy Yeulet / 123RF Photo

When discussing financial planning, it’s often discussed in the context of the strategies and actions that you and your spouse need to implement into your financial plan. The reality is, it’s increasingly common for people to retire single.

When people retire single, they face unique challenges that their married peers may not experience. In order to better prepare for these challenges, we’ve outlined three areas that are of particular importance for single retirees.

Savings Rate

Generally speaking, singles may be able to only save half as much as their married peers since they are relying on a single income rather than two incomes. This would be less of an issue if singles’ living expenses were half of married couples.

Unfortunately, the cost of living for singles is typically 60-80 percent of what a married couple would spend, and it’s not unheard of for a single person to have the same living expenses as a married couple with similar living standards. In other words, on a per-person basis, the cost of living for a single person may be 40-50 percent higher than for a married person.

This means that the amount singles need to save for retirement is disproportionately higher than it is for couples. And this higher savings rate applies to more than just retirement savings—a well-funded emergency fund may be more important for singles as they don’t have a partner to rely upon.

The standard rule of thumb is that you should have about six months of living expenses in a safe, liquid account, but singles may want to err on the side of having closer to nine months of living expenses in their emergency fund.

Risk Management

As we touched on earlier, singles don’t have a spouse to rely on if anything happens to them. The way to guard against that risk is via insurance, namely long-term care (LTC) and disability.

For partners, if one person needs care, the other person can help serve as their caregiver. For singles without that option, purchasing LTC insurance can be extremely beneficial in the event you need care for an extended period of time. The first words that many people think of when it comes to LTC are “nursing home.” Yes, these policies can pay for a room in a nursing home, but they can also pay for home health aides and other forms of in-home assistance, thereby helping preserve your independence.

The same holds true for disability insurance. Singles are solely dependent on their own income. If you are no longer able to work, your entire stream of income becomes threatened. If the disability policies offered through your employer won’t provide enough benefits if you’re unable to work, then you may want to look into purchasing a private policy.

Estate Planning

Even if you have no partner and no children, you’ll likely still want to have some estate planning elements in your financial plan. You may have dependents that rely upon you, such as an aging parent or a sick friend. In situations like this, you may want to have life insurance with the dependent named as the beneficiary to help ensure they have adequate financial support if anything happens to you.

A power of attorney is another important document for singles. If you have a spouse, they’re able to speak for you on your behalf if you become incapacitated. That’s a luxury that singles don’t have, meaning you need to find someone you trust that you’re willing to designate as your power of attorney.

The focus of this column is geared toward single retirees, but that shouldn’t minimize the importance of savings rates, risk management and estate planning for married retirees. Proactive planning can help you be ready for whatever challenges you may face in retirement, no matter if you’re single or married.

Bruce Helmer and Peg Webb Bruce Helmer and Peg Webb are financial advisers at Wealth Enhancement Group and co-hosts of “Your Money” on KLKS 100.1 FM on Sunday mornings. Email Bruce and Peg at Securities offered through LPL Financial, member FINRA/SIPC. Advisory services offered through Wealth Enhancement Advisory Services, LLC, a registered investment adviser. Wealth Enhancement Group and Wealth Enhancement Advisory Services are separate entities from LPL Financial.

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