Retirement Planning for Singles
There is a growing trend among the nation’s retirees: unplanned singlehood
A March 2012 report by the BMO Retirement Institute, “Single in Retirement,” offers interesting analysis of the number of Americans who live alone in their golden years, and it offers some advice on how to deal with it.
Predictably, according to a 2011 U.S. Census Bureau report, 43% of people ages 65 and over are single. Their marital status is attributable to the death of their spouse (63% of older singles), divorce (28%), or having never married (9%). The percent of older singles is almost certain to rise as baby boomers reach retirement age, especially among women, who tend to outlive men by a large margin and whose salaries and pensions tend to be lower than those of men.
Single retirees have a 40-50% higher cost of living compared to married couples, and single women tend to have half the money saved for retirement than that of couples in the same age bracket. Trying to maintain the same standard of living on one person’s pension instead of two can be daunting. There are also potentially additional expenses that a newly single person can incur when a spouse is no longer there to help with cooking, cleaning, household maintenance or other necessary functions.
Planning Is Key
For a working-age single person, planning for retirement is at least as important as it is for a married couple. Regardless of marital status, taking a realistic look at your financial situation can be the first step toward having confidence in your financial stability going into retirement. Many people are understandably reluctant to discuss or even think about the possibility of facing retirement alone, but starting the planning process is essential to ensure that your golden years aren’t burdened with constant financial worries.
The BMO report includes these recommendations:
Plan for retirement as early as possible. Without another source of financial support to cushion them, planning for probabilities and eventualities becomes paramount.
Build and sustain wealth. With retirements extending well past the 10-year mark that was typical a generation or two ago, the financial pressure of retirement has increased. Not surprisingly, many retirees experience a loss of wealth throughout their retirement years, and that loss is even more pronounced among single retirees.
Get a clear picture of income and expenses. Virtually every pension scenario (whether a private pension or Social Security) favors a person who is or was married. At the same time, single people spend a larger percentage of their income, compared to a couple, on housing-related expenses. Those and other factors create an income-expense squeeze that can be especially harsh for singles.
Focus on social and emotional well-being. Feelings of identity loss and loneliness are normal for all retirees, and it can be even more stressful when you go through it alone. Many studies show that depression can be averted by taking an active role in the community and staying socially connected. Furthermore, these behaviors can have a direct, positive impact on physical health.
Devise a comprehensive health strategy (including end-of-life decision making). Lacking the extra financial resources and personal care a spouse can provide, single retirees may have a greater need to plan for the probability of health care expenses.
Talk to Someone (Soon)
Even if you are already feeling financial stress while still working, don’t let the scenario described deter you from preparing for single retirement. Any positive steps you take now are likely to improve your situation later. Seeking guidance from a qualified advisor who can analyze your needs and suggest possible options is a good way to start – and to gain new hope for a good life in retirement.