Going It Alone: Retirement Planning for Singles

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By Mark Henricks

NEW YORK -- So ... are you single? If you are a 20-something, chances are nearly 2 out of 3 that you are. A 2014, Gallup poll found 64 percent of 18- to 29-year-olds reported being single and living alone. Gallup also found the percentage of young adults not in a committed relationship has jumped from 52 percent a decade earlier. And that makes it strange that so much of today's retirement planning advice ignores the special challenges of the single saver.

Single, unmarried people planning for retirement face a host of differences, including reduced need for life insurance (but higher need for long-term care coverage) compared to their hitched-for-life colleagues. The biggest difference may be lower income, especially since today both members of most married couples are working, notes Beth Lynch, a financial planner with Schneider Downs Wealth Management Advisors in Pittsburgh. Less income, basically, makes it harder to save.

%VIRTUAL-pullquote-Single people need to make sure they save a greater amount to their tax-deferred accounts and start early.%"Single people need to make sure they save a greater amount to their tax-deferred accounts and start early," Lynch says. "They also need to build a larger emergency savings account than that of a two-person income household. They do not have anyone else to lean on should they lose their job, or have an extended illness."

Unfortunately, as the proverb suggests, one person can't live half as cheaply as two.

The biggest single expense for most people is housing, and single people still have to pay rent and mortgage bills, often on a residence that could house two. In fact, married people in their late 20s spend about $7,200 less per person, according to the Bureau of Labor Statistics. And that means singles have that much less left over for saving.

On the plus side, singles will find it easier to decide how to spend what they do have. "Couples may be on two different sheets of music when it comes to money," notes Larry Rosenthal, a financial planner in Manassas, Virginia. "One may be a saver, one may be a spender."

Whether they are savers or spenders, some decisions are likely to be different for singles, because they lack dependents. Life insurance represents one of those. "If somebody passes, you have to ask the question, 'Is there going to be someone else who will suffer a financial hardship?'" says Rosenthal. "If the answer is 'No,' they may not need it."

On the other hand, singles have greater need for long-term care insurance. Married people can hope that a spouse will help out in case of declining health due to old age or medical issues. "Singles need a plan to take care of themselves mentally and physically as they age, often with long-term care insurance," notes Jacob Gold, a financial planner with Voya Financial in Scottsdale, Arizona.

When it comes to annuities, singles also have different needs and opportunities. Annuities are insurance company products that allow savers to put aside money, usually in a single large lump sum, in return for future monthly payments that are guaranteed for life. Annuity buyers can opt for higher monthly payments that stop when the individual passes away or lower payments that will continue to be paid to a surviving spouse. "A single person may not have anyone else relying on those retirement dollars, so opting for the larger monthly payments may make more sense and increase retirement income," Gold says.

Additional wrinkles pop up with regard to Social Security. A married, divorced or widowed retiree can opt to get benefits based on a current or former partner's lifetime earning record, which may allow for higher Social Security payments, notes Lynch.

"The individual who has never been married can only receive benefits on their income record," she says. "This means more planning on when to retire and when to start taking Social Security benefits."
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