Ah, the single life. You can do as you like. There’s no need to deal with a spouse who has opposing views, a different vision of retirement. A spouse who spends too little or too much, or has difficult relatives, problems at work or no job at all.
But there are trade-offs. As a single person, you must navigate the many social events geared toward couples, including vacations. All decisions and expenses are your responsibility, and without a second income, you can’t afford to walk away from a job. Should you become ill, you won’t have a partner to provide support at a moment’s notice. A quiet house can seem like a peaceful oasis — or an empty space.
If you are divorced, a widow or never married, there are many folks like you. According to the Census Bureau, more than half of the adult population of the U.S. is single. A Pew research study estimates that 27 percent of adults 60 and older spend more than half of their day alone. What’s more, a 2019 Pew analysis of Bureau of Labor Statistics data indicated that some adults were spending as much as 10 hours a day by themselves. That was before the pandemic hit.
Shouldering the responsibility for your financial life may be daunting. In a study by Northwestern Mutual, 45 percent of single men and 50 percent of single women said they felt moderately or highly anxious about their finances, compared with 35 percent and 41 percent of married men and women, respectively. “Carrying the burden for all living expenses can be a challenge, not to mention managing the payments and making sure nothing is left undone,” says Lamar Brabham, a wealth management specialist and the founder of the Noel Taylor Agency in Myrtle Beach, South Carolina.
How do you make your financial footing as secure as possible? Experts suggest the following steps. Becoming more organized may give you a greater sense of control over your life.
1. Learn the basics
You may be used to handling money or having a partner do it. Either way, there is much to know. To start, you’ll want to be up to speed on Social Security and Medicare, and on when to take the required minimum distributions (RMDs) from your retirement accounts to avoid tax penalties.
If you’re divorced or you've lost your spouse, make sure you understand the rules around spousal and survivor benefits, says Bradley Lineberger, a certified financial planner (CFP) at Seaside Wealth Management in Carlsbad, California. You are eligible for these benefits if you don’t remarry before 60. (Others may be eligible as well.) He suggests attending retirement planning sessions to learn more. “Many of the community colleges offer classes taught by certified financial planners like me who love to teach,” he says. Another thing he recommends is, if possible, waiting until 70 to file for Social Security. You can file early, at age 62, but your benefits will be reduced for each month before your full retirement age. After you reach full retirement age, your benefit increases by 8 percent for each year you delay filing. "Where else can you get a guaranteed return of 8 percent per year?” asks Lineberger.
2. Seek expert advice
Now look for a qualified financial planner to help you develop a plan. Research from Northwestern Mutual shows that two-thirds of single people don’t have a financial adviser and that 49 percent have not spoken to anyone about retirement — double the percentage for married people.
“Financial planners can run scenarios and investigate the lifestyle spending a person has and determine it. This helps the person understand when they can afford retirement or how many more years of work they need to perform,” says Jordan Benold, a CFP at Benold Financial Planning in Frisco, Texas. “Social Security and Medicare can be examined in this analysis.” D. Scott McLeod, a CFP at Brown Financial Advisory in Fairhope, Alabama, also recommends tax planning long before retirement. “Because single filers have lower thresholds in the tax brackets, being very intentional about your savings vehicles, your distribution plan, when you draw Social Security and your required minimum distributions is critical to properly manage your bill.”
Chuck Czajka, a certified Social Security claiming strategist and the founder of Macro Money Concepts in Stuart, Florida, offers another strategy. "You must start taking required minimum distribution at age 72, but you might want to consider taking distributions early. This could be a good way to delay claiming Social Security and maybe even wait to age 70 to claim. Your benefits at 70 will be about 132 percent higher for the rest of your life including cost-of-living adjustments."
3. Create, and stress-test, your income plan
Laurie Allen, a CFP at LA Wealth Management in Manhattan Beach, California, creates income plans tailored to her clients’ current needs. “What worked for you as a couple may not work now. One of your Social Security incomes may be gone, and possibly a pension, too.” When creating an income plan, Michelle Gessner, a CFP at Gessner Wealth Strategies in Houston, Texas, considers unforeseen events, such as disabilities, family financial issues, investment losses and the maximum spending a plan can support. “I beat the heck out of it to ensure that we have thought of everything.”
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4. Assemble a worthy team of advisers
Your financial planner should be just one of a team of experts who advise you on your investments, estate and tax matters, and health care needs. “You may also require a will, perhaps a revocable living trust, a durable power of attorney, a medical power of attorney and a living will,” McLeod says. You must also designate a personal representative or executor to take charge in case you can't handle things yourself. This role requires some expertise, and the ability to handle multiple details. What if you don’t have a trustworthy or capable family member to handle the job? McLeod suggests designating someone from your advisory team.
5. Think hard about long-term care insurance
Do you need long-term care insurance? Andrew Houte, director of retirement planning at Next Level Planning & Wealth Management in Brookfield, Wisconsin, says such a policy may be important for individuals who don’t have a partner to take care of them in the event of a major illness or if they're incapacitated. “It may be less important if all your assets can go toward providing your care. You won’t be using funds that a spouse would need in the future.” Lineberger likes some of the newer life insurance policies that offer a permanent death benefit with a long-term care rider. “It’s a nice compromise.”
6. Gather all documents and digital files, write out instructions
Getting your affairs in order will lend peace of mind while providing a “roadmap” for your personal representative or executor. Assemble a binder of all your legal documents, including a list of all financial accounts, utility bills, life insurance policies and work-related benefits. Don’t forget to create a digital plan, so the personal representative named in your will or power of attorney document has the legal authority — allowed in many states — to access your online accounts and digital property. This includes your digital assets (websites, blogs, art, music, writing, business websites, cryptocurrency and more) and digital information (email accounts and social media).
In the event of your death, your representative can use this information to liquidate your assets, finalize your debts and share the news of your passing via your email and social media accounts. Be sure to write out clear instructions for this person, and keep them updated. To protect these vital records and your passwords, use a combination of low-tech (a binder) and high-tech methods (a thumb drive or secure website). Your instructions should include how to locate everything, including keys to your home. You can start by using the Emergency Financial First Aid Kit from the Federal Emergency Management Agency (FEMA).
7. Find a new purpose
Finally, focus on creating a sense of community; it will be vital to your well-being and contentment in retirement, Lineberger says. "Be intentional about creating community in your life, whether that be through places of worship or other civic groups. Find people to spend time with.” McLeod advises planning for a transition that adds significance and meaning. “This is even more important when you’re single, as having a ‘get me out of bed’ purpose might be the difference between a joyful life and a painful, lonely existence. Find your passion and stay engaged.”
Patricia Amend has been a lifestyle writer and editor for 30 years. She was a staff writer at Inc. magazine; a reporter at the Fidelity Publishing Group; and a senior editor at Published Image, a financial education company that was acquired by Standard & Poor’s.