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11 Tips for Successful Retirement Planning for Singles

Date : Mar 09,2016
By : Joel Ray

The process of aging is fraught with insecurities, and when you’re single, divorced or widowed, these can be more insistent. Single people draw the short straw when it comes to tax and insurance benefits, spending more than their married counterparts for every aspect of financial planning.

A retirement savings plan with diversified investments is essential for singles, and here’s why:

  • Singles need more coverage for long-term care (LTC) than couples, since they cannot depend on anyone else for LTC needs.
  • Singles face a higher risk financially, since they need to pay for their home, vehicle, utilities and other expenses on their own.
  • Singles pay up to 70% of the cost of living shared by a married couple, so they need to earn and save more for their financial goals.

What Should You Do?

Here are some of the best tips to help you retire in comfort:

    1. Take Time to Plan – Set a realistic budget, account for inflation and potential financial emergencies, consider how long you expect your retirement to be and understand how long you need to work and save. A retirement calculator can help you crunch the numbers and reach a monthly savings goal.

    2. Start at the Earliest – One of the most effective ways to enjoy a comfortable nest egg when you retire is to start saving as soon as possible. When you put money away early and often, you earn interest on it for longer. Since this interest is compounded, your savings will just keep growing!

    3. Educate Yourself Thoroughly – You don’t need to become a financial expert, but understand your options and restrictions. Familiarize yourself with the workings of your 401K, IRA and Social Security benefits, as well as other financial vehicles available, so you can choose what works for you.

    4. Consider LTC Costs – One of the biggest drains on retirement savings is extended care and medical expenses. Long-term care (LTC) costs are on the rise, as is life expectancy, so plan how to retain your independence and comfort even if you need assistance with age-related issues.

    5. Get Life Insurance – Think life insurance is only useful for families? If even a single person will be financially affected by your death (or face the burden of your funeral expenses), you need some coverage. Using insurance as an investment gives you benefits during your lifetime too.

    6. Be a Little Selfish – Yes, you need to put yourself first. You may be tempted to help children or aging parents with their expenses instead of saving for retirement, but you can’t afford to neglect your own future. As you get older, you may not have anyone else to rely on except yourself!

    7. Minimize Your Taxes – It may not seem like much, but every penny saved in taxes adds up to your retirement nest egg. Most tax benefits are designed to help families and married couples, but investments that offer tax-free payouts (like whole life insurance) give you some relief too.

    8. Avoid Early Distributions – Don’t dip into Social Security, 401(K) or IRA funds (except mandatory distributions). Couples have some leeway with Social Security (the surviving spouse receives the higher benefit if one dies), but singles don’t. The longer you wait, the more you get.

    9. Build a Support System – You need a network of family or friends when you retire. They will help you emotionally and look out for you in case of illness or emergencies, and vice versa. You could even split retirement costs with other singles by living together and sharing expenses.

    10. Consider Legal Protection – Single, you’re at greater risk than those with spouses to look after them. What happens if your mental faculties are affected by age? Set up a living will and Power of Attorney that gives a trusted person the right to make financial and care decisions on your behalf.

    11. Consult a Professional – You need to pick the right investments and make a wide range of decisions to ensure a worry-free future. Retirement planning is complex, so find an advisor you can trust and use their expertise to your benefit, in pre-retirement as well as retired life!

Agent Short Bio: Joel Ray is an experienced financial advisor and his areas of specialization include retirement planning and risk management. When Joel is not working with clients, he is busy creating informative blogs and whitepapers. Follow this financial whiz @life_centra. You can also check out his fiscal blogs and videos on LifeCentra.