Single Retirement Tips: How to Prepare for a Solo Old Age

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Time retirement steps at each ageWhen it comes to the problems that arise in old age, married retirees can usually rely on their spouses for support. But for singles, handling the golden years can be more problematic.

Last week, we got advice from the experts on how to prepare in "On Your Own: How to Manage the Finances of Single Retirement."

Here's a rundown of what they suggested:

If you're single and in your fifties...

  • As you get older, health care decisions will become a bigger priority -- and having someone to speak for you in an emergency will become vital. If you're facing old age without a partner, it's a good idea to find someone you trust to take responsibility for your medical power of attorney.
  • Living alone can be the pits. Think about finding roommates to share the expenses and provide companionship.
If you're single and in your forties...
  • Chances are that you're going to need some form of long-term care as you get older. Get long-term care insurance now to help with bills later.
  • Financially speaking, it's better to divorce earlier than later. And while you're married, you should stay conversant with all the details of your household income and expenses. Know where your money is ... and what it's doing for you.
If you're single and in your thirties...
  • If it looks like marriage won't be in the cards for you, start building equity now. Real estate can be a good investment ... and may give you money to tap into later.
  • Just because you don't have to pay for child care, tuition and other childcare-related costs doesn't mean that you should spend your whole paycheck. Save early to ensure your security later!
Single Retirement Tips: How to Prepare for a Solo Old Age

Take five ways to boost your income and five ways to reduce your expenses and debts and you have USA Today's 10 secrets to a financially secure retirement.

Click through our gallery to see the steps you should be taking, including why you should not start collecting Social Security checks at age 62 (Slide No. 5).

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First Up: 5 Ways to Boost Income
"The decision to retire is sometimes made for superficial reasons," Alicia Munnell, director of Boston College's Center for Retirement Research, says. She's heard many stories of older workers quitting suddenly because they had been stuck on airplanes too long during business trips. She heard of a woman recuperating from a sprained ankle who decided she really liked to watch daytime television, so she retired. Some quit because they were peeved at younger bosses. Leaving in a huff without developing a solid exit strategy, though, can be financially foolhardy.

Next: Secret No. 2
Plenty of investors turn timid as they age, so it's no surprise that many retirees consider stocks off-limits. What they fail to realize is that an ultra-conservative portfolio stuffed with bonds and certificates of deposit can't keep up with inflation. It may be hard to imagine, given the current bloodbath on Wall Street, but over the long run, returns from stocks and stock mutual funds tend to surpass the returns on other investments. Adding stocks to a retirement portfolio can boost your returns without exposing you to reckless risk.

Next: Secret No. 3
Those lucky enough to retire with a pension must often decide whether to take a lump sum or a lifetime of monthly checks. Grabbing that huge chunk of change all at once is exceedingly tempting, but retiring workers should consider consulting a pension actuary before making such a momentous decision.

Next: Secret No. 4
You can start collecting Social Security checks at age 62, and most Americans go for it. But their eagerness can curtail their retirement income. If you delay Social Security past age 62, your benefits will increase significantly. Crunch your own numbers, using various retirement scenarios, by visiting the Social Security Administration's website at www.ssa.gov.

Next: Secret No. 5
What's required to be a successful investor hasn't really changed from the days when stock prices were ripped off ticker tapes. "The whole purpose of investing for the long term is to make your money grow faster than inflation deteriorates it, " says author Lewis Schiff. "For those investors who take the long view and practice the simple arts of diversification, compound returns and dollar-cost averaging, and especially those who do so in tax-advantaged accounts, this growth is well within reach." If you're not confident in your own investing skills, consider using low-cost target retirement funds offered by big mutual fund companies.
Next: 5 Ways to Reduce Expenses
People need to remember that it's after-tax returns that matter," says author Taylor Larimore. The after-tax performance of mutual funds can look shockingly different from their posted figures. During the decade that ended in 2007, for instance, Lipper estimated that fund investors lost anywhere from 17% to 44% of their returns to taxes. Many retirees woefully underestimate their tax hit because they incorrectly assume that their tax burden will plummet once their paychecks dry up. A great way to stanch the tax hemorrhaging is to invest in tax-efficient index and exchange traded funds.
Next: Secret No. 2
Obviously, carrying a credit card balance is a no-no, but if you haven't managed to erase your debt, there's a painless way to tackle the problem: Call your card issuer. "If you have good credit -- a 700 FICO score or better -- you have a ton of leverage with credit card companies, which are scared and worried about their profit margins," observes author Liz Pulliam Weston. Card issuers hate losing customers, so they're generally willing to negotiate. If you enjoy good credit, you should be able to capture a rate below 10%.

Next: Secret No. 3
No one's asking you to deny yourself a $4 latte, but if you're living beyond your means, it makes sense to root out the budget-busters. "You have to know where the money is going in order to know where to cut back," Weston says. Recording your purchases for a week can prove a tremendous help.

Next: Secret No. 4
Investment fees are a natural enemy of retirement portfolios. But many investors are oblivious to this predator. Why? Because investors of mutual funds and annuities aren't billed for these expenses. Instead, the fees are automatically deducted. You can see for yourself the damage that even average expenses can wreak on a mutual fund by using the U.S. Securities and Exchange Commission's mutual fund cost calculator at www.sec.gov/investor/tools.shtml. Try sticking with mutual funds that charge an annual expense ratio of 1% or less.

Next: Secret No. 5
Regardless of your age, take care of your health and you'll probably save money. "Eat right, exercise and care for your teeth, eyes and ears," says Henry Hebeler, the creator of AnalyzeNow.com, a financial website geared toward retirees. "By the time we get to retirement age," Hebeler adds, "health care costs are the single largest item in most of our budgets, and early prevention of health problems pays huge financial dividends."

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