Retirement Planning for Single Seniors

A single senior planning to enjoy the freedom of her retirement

Being single and retired is increasingly common. Over 30% of seniors are currently single, according to a Pew Research study. And a report from the Social Security Administration Office of Retirement and Disability Policy, says a growing number of women will enter retirement single due to divorce, widowhood, or never marrying. This view of the single senior disrupts long-held images of the typical retiree. It also reflects a need for single retirees to plan for their retirement more carefully, understanding how their single status impacts finances, healthcare, companionship, and taxes. 

We spoke with some retirement planning experts to get their advice on what single seniors need to make sure they’ve covered in their retirement plans. Here’s what they said.

Don’t Forget Your Estate Plan  

Even if you’re single, you should consider your estate plan. “Often when you’re single, you neglect your estate planning needs, but it’s just as important to your retirement plan regardless of your marital status,” says certified financial planner and president of the Delaware-based firm Diversified LLC Andrew Rosen.  

According to certified financial planner and Senior Vice President of Minnesota-based financial firm Integrated Equity Management,  Danica Goshert, it is a good idea to cover your bases with the following elements of your estate plan:  

  • Identify your beneficiaries. Since spouses aren’t a consideration, make certain beneficiaries reflect your intent. If you’re divorced and have children whom you want to be listed as beneficiaries, make certain your documents reflect this wish.  
  • Have a health care directive. In case of a medical emergency, have you stated explicitly what measures you want to be taken in case you cannot express your wishes? 
  • Appoint a power of attorney. Financial power of attorney will allow you to distribute your assets according to your wishes.  
  • Inform the people you’ve appointed as executors or power of attorney. Talk with the individuals you’ve selected regarding their roles and give them a copy of their respective documents.  

Create a Retirement Budget  

Retirement as a single person means you cannot rely on a spouse or partner’s income or savings. Single retirees need to be proactive about creating a retirement budget.  

Joel Ohman, certified financial planner and CEO of Clearsurance, says it’s important to ask, “What will change when you retire? Calculate what you need to save to maintain your lifestyle, and then start saving with that goal in mind.” Once you make this calculation, you can list expected spending and potential expenses and try to track those items to establish a retirement budget.  

An added benefit to creating your retirement budget is it allows you to make decisions on government benefits. Focusing on what you need for your lifestyle will help you decide when to take Social Security disbursements. Contacting a financial professional to determine what works best for you may be helpful.  

Think About Long-Term Care  

For many single seniors, the question of who will care for them when they get sick is important. A short hospital stay may be easier to navigate than longer-term care, but single seniors need to plan for all unexpected health problems.   

Rosen thinks long-term care can impact single people more than married ones. “When you’re married, you may be able to rely on a spouse to help you if you need physical assistance and care, whereas he says you don’t necessarily have that same safety net when you’re single,” he says. When single seniors think about how to “pay for those costs, long-term care insurance is still likely your best bet, but there are other options, such as hybrid insurance, where long-term care is combined with life insurance. As with any insurance, the earlier you can get it, the better off you tend to be,” says Rosen.  

Consider Tax Planning  

Since you are on a limited budget, knowing how much you need to pay in taxes is crucial to avoid surprises. Just because you aren’t earning income doesn’t mean you don’t have to pay taxes. And, if you’re recently single, you’ll find that you won’t benefit from claiming the same deductions you did when you were filing jointly.  

Goshert agrees that “a little tax planning goes a long way, especially when taking distributions from a retirement plan or pension at the same time you’re collecting Social Security.” In addition, Medicare Part B premiums are based on taxable income, Goshert adds, “so it can be helpful to work with someone who specializes in income planning during retirement.” 

What’s Your Ideal Retirement?

Although considering a steady income stream in retirement is important, single seniors should consider how they will spend their time. For many, it may mean taking more vacations or spending days dedicated to a hobby. Single seniors have the luxury of not needing to accommodate a partner’s needs and wants when crafting what the ideal retirement looks like for them.

Rosen encourages retirees to find out what they want to do in the latter years of their life as “retirement dating.” Getting a good sense of how a retiree wants to spend their time in retirement can also shed light on how to allocate money in retirement. “If you know you’d like to travel, you likely won’t need a huge house. On the other hand, if you want to spend a lot of time gardening, a condo in a few states may not be a good fit for you,” says Rosen.  

Goshert agrees that “retirement planning isn’t just about the money.” She suggests answering a question about how a retiree wants to spend their time. One key question may be, “Are you volunteering, learning, traveling, and spending time with people who are important to you?” Goshert advocates that seniors consider a holistic approach to lifestyle in this next chapter and remember that remaining active and engaged can help prolong a quality of life. 

Find out how to use your home equity to live your best life

Learn More
CTA Image