Retirement Planning When You're Single
These tips can help single people plan for a more secure future.
Retirement planning is something everyone needs to do, and the earlier you start, the better off you'll be. Having a partner to share life's financial burdens with can be an advantage, but being single also has a plus side. It means that you can make all the decisions about your future yourself, without making compromises to please someone else.
Save, Save, Save
Obviously, the best way to get started on your retirement goals is to save as much money as possible, and if you're single, you’re the one who decides how much that will be. While you may have just one income, you are also solely responsible for any spending. If you are focused on saving for retirement, you can eliminate needless spending. You can also save more money as your career progresses. As you receive pay raises, for example, put the extra money in savings rather than upgrading your lifestyle.
Live Within Your Means
Part of saving money is living within your means. Don't run up your debt and make purchases you can't really afford. As a single person, it can be tempting to be extravagant from time to time because you don't have a partner to consider, but living within -- or better yet, below -- your means, allows you to save more money and help create a more secure future for yourself.
Keep Your Debt Down
Part of living within your means is not running up debt. Be responsible with any credit card accounts and loans. Make your payments on time and pay them off as quickly as possible so you're not incurring interest charges. The sooner you have an account paid off, the sooner you can be putting that money toward your own savings or retirement account.
Consider Your Location
Many freedoms come along with being single, and one of those is the ability to pick up and move anywhere you want without having to consult anyone else. Of course, your employment situation is a factor, but assuming you have a solid plan, there's nothing stopping you from moving cross-country or even to another country altogether.
Do some research to find a place that meets your lifestyle needs and has a cost of living that you're comfortable with. Even if you don't plan to move immediately, you can include geography in your future plans. Moving somewhere with a relatively low cost of living can help you financially prepare for the future.
Make a Will
When you're married, your assets typically go to your surviving spouse after you pass on, but things aren't necessarily as cut-and-dried when you're single. Be sure to make out a will, name an executor (someone you trust to carry put your wishes) and name beneficiaries.
Set Up a Power of Attorney
In addition to making out a will, you'll need to name a power of attorney to sign any necessary paperwork if you become incapacitated and unable to do so yourself. It’s also a good idea to set up a “living will” spelling out your wishes for medical care.
Research Social Security Options
You'll need to understand how Social Security will work for you.
As The Balance explains (1), "You’ll get far more by waiting until 70 to claim. For most singles, it will only make sense to claim earlier if you have reason to believe your life expectancy is shorter than average. If you do claim before you reach your full retirement age and you continue
to work, watch out for the Social Security earnings limit; you could end up owing money back if you make too much. Once you are past full retirement age the earnings limit no longer applies."
If you have been in a marriage of more than 10 years, there's a chance you'll be able to claim a spousal benefit or a widow/widower benefit. Either of these would depend on your former spouse's earnings record. Whatever your situation, make sure to research the options available to you.
Don’t Forget Insurance
If you have no dependents and have enough savings to cover burial costs and other final expenses, you may not need life insurance. However, it may be worthwhile to consider a long-term care insurance policy in case you’re unable to care for yourself in your final years.
Consult a Professional
Whether married or single, it makes sense for anyone making retirement plans to consult a financial professional who can provide the information and guidance you need to make wise choices.
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The information provided is presented for general informational purposes only and does not constitute tax, legal or business advice. Any views expressed in this article may not necessarily be those of Nevada State Bank, a division of Zions Bancorporation, N.A. Member FDIC