13 tips for singles nearing retirement
If you're single and about to retire, you're about to join 20 million other unmarried retirees in the U.S. who have different concerns than married folk, and need different considerations when planning retirement. Some singles are divorced, separated and never married, but most, (11 million) are widowed, according to a 2015 Leisure in Retirement study by Merrill Lynch – which means you've probably already learned about end-of-life issues, and you know you'll need plans in place so that decisions can be made on your behalf if you're under the weather.
Save as much as possible, as early as possible.
Singles don't always have the option to cut bills in half by sharing expenses with a partner, or get the tax breaks married people do, and they don't have a spouse to take care of them when they're sick. "Given the known disadvantages, singles must be more diligent in saving for retirement. This means saving at least 10 to 20 percent of income each year," says Melinda Kibler, certified financial planner and portfolio manager with Palisades Hudson Financial Group.
See the average retirement age in every state:
Plan to live a long time.
And, perhaps talk with a financial professional about annuities, which will calculate a monthly payout based upon your life expectancy and will pay out until you die, even if the tally is more than the contract's earnings. "Annuities may be appropriate to help hedge longevity risk," says Christine Benz, director of personal finance for Morningstar.
Consider your new purpose.
It can be tricky to transition to the life of a retiree from a work life that seemed to claim most of your time. Envision what you'd like from your life ahead. "The to-do list and vacation plans only take up so much time," says Wendy Moyers, a certified financial planner and principal of Linden Oak Wealth Partners. "What will you do day to day? How will you stay connected to your community, family, friends? Where will you find your sense of belonging and purpose?"
Invest your retirement savings.
Develop a diversified portfolio of low-cost mutual funds or exchange-traded funds with sufficient exposure to equities based on your time horizon and risk tolerance, Kibler says. "The more time you have, the more aggressive you can be, since you will have time for the market to recover before you'll need to use the funds," she says.
Know your money.
Know extra sources of income in retirement and anticipate health care and other living expenses, Moyers says. Medicare doesn't cover things like long-term care, or dental and vision insurance. And health care premiums can be more than $100,000 over the course of a single's retirement. "A good rule of thumb is to save at least 13 to 15 times the average of your last five years of salary for retirement. For example, if you earn $70,000 year, you would want to save at least $910,000 to retire," says Jon W. Ulin, certified financial planner and managing principal of Ulin & Co. Wealth Management.
Weigh your stocks.
While it can seem wise to dramatically reduce your stock exposure in your retirement plan, be careful, Moyers says, especially if the portfolio needs to last a few decades. "You do not want to have too much stock, but you don't want to reduce your stock portfolio too much as stocks are the best way to beat inflation over the course of your retirement," she says.
Consider long-term care insurance early.
This coverage can help to provide you with nursing care and things health care doesn't cover in the event of something like a stroke. Getting it earlier in life lowers costs, "and can literally be a lifesaver," says Mike McGrath, vice president with EP Wealth Advisors. Also, let those closest to you know if you'd like to hire help in the event of an illness or incapacitation, Moyers says.
Update your estate documents.
These documents include your will, medical directive and power of attorney, individual retirement account and life insurance to include beneficiaries, plus arrangements for your pets. "Otherwise, the state in which the retiree lives will be called up on to choose who will manage all affairs on the retirees' behalf," Moyers says. "Make individuals aware of the duties you have assigned them in your estate documents and be sure that they either have a copy of the documents, or know where to find them," says David McCormick-Goodhart, financial advisor at Savant Capital Management.
Prepare with disability insurance.
"Everyone should consider disability insurance, but especially singles who would see an enormous disruption in their earnings – and in turn their savings potential – if they were to encounter some type of disability," Benz says.
Retire at 70.
"Every year past full retirement age that they postpone filing boosts their monthly benefit by 8 percent thanks to the delayed retirement credit. If your full retirement age is 66, waiting until age 70 to collect Social Security guarantees your benefit will be at least 32 percent higher," says Gail Buckner of Franklin Templeton Investment.
Identify potential sources of income.
Extra space can make extra income, says Marcie Rogo, co-founder of Stitch.net, a large online companionship community for single adults older than 50. "Stitch has a partnership with Spacer to help seniors identify extra space that they do not use," she says. The space is often in high demand from people with small apartments, so retirees can draw extra, easy income. Also consider renting rooms on Airbnb, or becoming a driver for Uber or Lyft. It's a way to make extra money, and stay connected. "Most retired drivers I've talked to drive during the day to avoid drunk people at night," Rogo says.
Science says loneliness and isolation can whittle years from your life, so always find ways to stay connected. "From a health perspective, you should make sure that you are not just cutting out work and being alone all day. You should have activities lined up because social isolation will ultimately kill you," Rogo says.
Plan the next steps in detail.
To be of any real value, you have to include the details, not just general ideas of the steps needed to reach your goals, says retired research psychologist Rob Pascale. "If done right, the creation of this retirement map will result in concrete plans and a clearer overall path. Better still, because the plans are specific, there is a better chance they will actually be implemented," he says.
Copyright 2016 U.S. News & World Report