If you are single, you should be planning your retirement a bit differently than married couples or people with children. Last week I received a comment from a Wealth Pilgrim reader kicking my bottom for virtually ignoring the single folks out there. Everything from investments to Social Security benefits information is different when you’re single. Here’s the e-mail:
I am a lifelong single person and it seems that many of your blogs assume that everyone is married and has a family. I also need to do some planning, which is more complicated by having no siblings and both of my parents being deceased. I would like you to address concerns of those of us who have no dependents or immediate heirs.
It’s a fair – and important question. I don’t know much about the person, but let’s make some assumptions in order to answer the comment. For argument’s sake, let’s say this is a woman who is 57 years old with no siblings, parents or dependents. Let’s call her Clare to make things easy.
So what’s Clare to do?
First, let’s consider the positive side of her situation.
From a financial standpoint, she doesn’t have to worry about supporting anyone now or in the future. That’s a pretty cool financial head start. I could be wrong of course, but from the comment Clare left, it sounds like she doesn’t have to worry about debt either.
So what are her concerns?
Well…again…I don’t know that much about this person, but I do know that it’s all up to her to make sure she’ll survive financially. She isn’t going to inherit any more money and nobody is going to support her in case of need.
Here are the steps I recommend:
1. What’s the plan, Clare?
You must have an airtight plan for the future. How much does it cost me to live now? How much money do I need to retire? Should I pay off my mortgage? What will my sources of income be?
Neal’s Notes: Planning for your future can be especially difficult if you are a single mom. Fortunately, there are good resources to help you navigate this situation – right here on Wealth Pilgrim!
You simply must have a financial plan. I actually think this more important for a single person than for a married person and I’ll tell you why. My experience tells me that married couples – especially if they have children – find it very tough to forecast what is going to be down the road. So many things are changing so often that plans must be very flexible. Even then, they may not be much use.
Of course it’s better to plan and be wrong than not to plan, but a married person’s financial plan is subject to more change than a single person’s. At least that’s been my experience.
Single folks that I know have had time to figure out what they like and what they don’t like. They have fewer distractions. Fewer obstacles. They seem to find a groove, and it’s rare that I see single folks who make huge, unexpected changes.
I do think it’s easier to plan for one than for three, and singles should take advantage of that.
2. Long-term care insurance
I’m not a big fan of this coverage for most people, but when it comes to singles this coverage can be extremely important. I’ll write an entire post about what to look for – and what to look out for – when it comes to long-term care soon. But if anyone is a candidate for this coverage, it’s a single person.
Caveat: Sometimes a single person doesn’t need long-term care because they can use up all their own assets and not need to worry about leaving anything behind for a survivor. On the other hand, nobody is going to be there to provide for them, so they may find themselves needing to pay for services that couples or folks with kids get for free.
Of course you have to look at your own situation before you make a decision, but all things being equal, singles need to consider this coverage.
3. Estate planning
This also depends on your unique situation. If you don’t care about leaving money for other people or charities, you may not care about having a good estate plan. The probate lawyers will certainly appreciate it if you ignore this!
But single people need to make sure they have a proper power of attorney and health power of attorney set up. These documents will allow other people – friends or professionals – to step in if you are unable to sign your name or manage your affairs. The good news is, these documents are pretty simple to set up. You can use a service like Legal Zoom to get it done fast and inexpensively.
In summary, I’d say a financial plan, long-term care and estate planning are the major issues that singles have to consider differently than couples.
Is there something else? If you are single, what other concerns do you have? How are you planning for your retirement? What else would you suggest single folks consider in their financial planning for the future?
Or instead of long term care insurance, a single could investigate a continuing care community with a guaranteed committment to keep the person whether at indepentent living, assicted living or skilled nursing care levels. Often these communities require a buyin payment in order to cover the health care the person will probably need later.
I’m a single 63 year old woman and on the wait list of a quite nice one in my area.
Neal@Wealth Pilgrim says
Excellent point Ann….
Maybe it is because it is what I do, but I think there should even be more emphasis on the estate plan. If you don’t have a Will, your estate will pass via intestacy. Each state is different:
But the State will decide where your assets go. It may be a brother or sister you hadn’t talked to in years, or their child instead of your fav church or charity.
Again, I am probably just commenting since this is what I do! lol
This situation is different than my single situation. I am young and single, have family and would like one day to have my own family, but being young and single now and preparing my retirement accordingly. Completely different situations but it seems that if you don’t have any dependents you have no one else to worry about at all.