Smart planning for singles

  • Retiring solo is becoming more common, whether by choice or circumstance
  • From insurance to estate planning, needs differ significantly from couples
  • If you’re single, your advisor can help with immediate and longer-term decisions

If you or a parent are one of 17 million Americans retiring single, it may be inspiring to know that you’re in the majority. More than half of American adults are unmarried — 50.2% to be exact.¹ While the numbers may be somewhat skewed by Millennials waiting longer to get married, it’s not just the younger generation driving the statistics: Divorces tripled among those 65 and older between 1990 and 2012.²

Today’s singles are reinventing what it means to retire alone, staying active in their communities and leading full and meaningful lives. Whether you’re single by choice or circumstance, here are some key considerations to help you stay on the path to a confident retirement.

Living single

A single person typically spends more income on expenses such as housing, transportation, food and even travel than an individual in a relationship that can share the expenses. While that means singles may need to save more for retirement, there may be other areas where expenses are lower — especially for those who do not have dependents. Key considerations include:

  • Singles may be able to save on life insurance if they don’t have any dependents — and estate planning in general can be simpler for those who never married or had children. If you’re looking for other ways to leave a legacy, remember that there can be tax benefits to giving money to causes.
  • Other types of insurance could be more crucial for singles, considering family assistance may not be available for daily activities later in life. Long-term care covers in-home help and a variety of assisted living options, allowing you to maintain independence in retirement. Disability income insurance in conjunction with an emergency fund is crucial for singles in case of temporary inability to work.
  • Engaging someone you trust to serve as your power of attorney can be more important for singles in lieu of a spouse to speak on your behalf if you encounter health issues.
Singles are reinventing what it means to retire solo, staying active in their communities and building full and meaningful lives on their own.

Suddenly single?

If divorce or a spouse’s death is a recent event, you may want to take up residence for the next 12 months in the “no-decision zone” — in other words, hold off on selling your home, rethinking your portfolio or making any big gifts or purchases while in the fog of grief. That said, some actions should be taken soon after a life-changing event. A financial advisor can help prioritize items that need immediate attention from those that can wait. 

If you’re recently divorced 

  • Consider revisiting your retirement plan as soon as possible after a divorce. You may want to set different goals for your new life and adjust savings rates accordingly. Couples often have “built-in” diversification simply through holding different types of accounts. Adjusting your asset allocation appropriate to your personal risk tolerance is sometimes necessary.
  • Divorcees can receive spousal Social Security benefits if the marriage lasted at least 10 years and the ex-spouse who would be receiving benefits hasn’t remarried.3 If 50% of your former husband or wife’s Social Security payment is more than 100% of your own, you’ll receive the equivalent of their full payment.
  • If your ex-spouse is still listed as your beneficiary, he or she could still receive proceeds from your estate, depending on individual circumstances and local laws. It’s safest to update all paperwork to reflect your current wishes.

For widowers and widows

  • If your spouse has passed away, don’t assume you should simply roll over their retirement accounts into your own. If you take distributions from their retirement account, the 10% IRS early withdrawal penalty is waived because it’s considered a distribution due to death. However, if you consolidate the accounts and you’re not yet 59 ½, you’ll have to pay a 10% early withdrawal penalty on any distributions you take. Your advisor can walk through various scenarios and help you come up with a plan appropriate to your new needs and goals.
  • Social Security survivor benefits can be collected as early as age 60. Once age 62 is reached, a widow/widower could swap over to their own benefits if they are higher (you'll receive either your own or your spouse's benefit --whichever is greater -- but not both).
  • Make sure your beneficiaries are updated, as well as your health care proxy and power of attorney. You’ll also need to update your will and might consider appointing a professional to handle your estate, rather than relying on children or other relatives. Appointing a neutral third party can take some of the emotion out of decisions about your estate.

Contact your advisor

Whether you’re never-married, divorced or widowed, an advisor can tailor a plan specific to your shorter-term needs as well as long-term goals.

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