You may have certain requirements if you’re single, divorced, or a widower. The joys of being single are obvious. You can do whatever you want. There is no spouse to deal with, no fights or dealing with a partner with conflicting ideas about how retirement should be spent. A partner who either lacks sufficient funds, overspends, experiences professional difficulties, or is unemployed is a burden.
Being single is not without costs. The social gatherings and getaways primarily designed for couples might be difficult to enjoy as a single person. Your sole responsibility is to meet your financial obligations; hence, you cannot afford to quit your employment if you are not already receiving any other kind of compensation. Becoming ill poses problems with caring for and an income. The silence of a home may make it feel like a haven of serenity or a soulless void.
There are a lot of people out there who can relate to you if you’ve been through a divorce, lost a spouse, or were never married at all. According to the Census Bureau, approximately half of all American adults do not have a significant other. According to a Pew survey, around 27% of people aged 60 and over spend more than 50% of their waking hours alone. Furthermore, some individuals spend as much as 10 hours a day alone, according to a 2019 Pew review of Bureau of Labor Statistics data. Before Covid-19, things were looking up.
It might be scary to put your financial fate in your own hands. Northwestern Mutual found that although 35% of married men and 41% of married women reported feeling moderate to high financial stress, 49% of single men and 50% of single women also felt financial stress. Wealth management expert and owner of the Noel Taylor Agency in Myrtle Beach, South Carolina, Lamar Brabham, says carrying the weight for all living expenditures may be a problem, not to mention organizing the payments and making sure nothing is left undone.
Is there a way to ensure the stability of one’s financial situation? The following are the recommendations of experts. Getting your life in order may help you feel more in charge.
1) Know the Fundamentals
You or your partner may be accustomed to managing financial matters. Whatever your position, you should learn what your partner does regarding your finances. You should also familiarize yourself with the ins and outs of Medicare and Social Security and the RMD schedule for retirement funds.
Bradley Lineberger, CFP®, of Seaside Wealth Management in Carlsbad, California, advises clients to familiarize themselves with the regulations governing spousal and survivor benefits if their spouse dies or divorces.
You can collect these advantages if you don’t remarry before age 60. (Others could qualify too.) The best way to learn, he says, is to sign up for retirement planning workshops. He explains that certified financial advisers like himself teach at several local community colleges. He makes another suggestion to wait until age 70 before applying for Social Security. You can start the process as early as age 62, but your benefits will be prorated for the time you spend working. Your benefit will grow by 8% each year after you reach full retirement age. Lineberger said to ask yourself where else you can obtain a guaranteed return of 8 percent yearly.
2) Consult with Professionals.
Find a competent financial advisor now to assist you in establishing a strategy. Northwestern Mutual found that compared to married persons, single people are twice as likely to not have a financial advisor, and almost half do not have discussed retirement with anybody.
Scenario analysis and in-depth research by a financial planner can determine a person’s lifestyle expenditure. This helps individuals determine when they can afford retirement or how many more years they need to work; Medicare and Social Security can be included in this evaluation; D. Scott McLeod, a certified financial planner at Brown Financial Advisory in Fairhope, Alabama, likewise stresses the need to consider taxes years before retiring.
Managing your tax burden as a single filer requires careful consideration of your savings vehicles, distribution plan, the timing of Social Security benefits, and RMDs due to lower thresholds in the brackets.
An alternative approach is provided by Chuck Czajka of Stuart, Florida’s Macro Money Concepts, who is a certified Social Security claiming strategist. It is mandatory to take distributions at 72, although you may want to start sooner if you can. This strategy may let you put off taking Social Security until you’re 70. After accounting for inflation at age 70, your benefits will increase by nearly 132% for the remainder of your life.
Develop a strategy for generating money and then put it through its paces
Laurie Allen is a certified financial planner at LA Wealth Management in California; Allen helps her clients develop long-term strategies for generating a steady income stream. Your past successes as a pair are no guarantee of future success, and you might lose some retirement or Social Security benefits. Planning your financial future involves disability, family financial troubles, investment losses, and the plan’s spending limit.
3) Put together a solid group of advisers.
Investments, inheritance and tax planning, and medical care are just a few areas where you should seek advice from professionals; your financial planner should be one of them. McLeod suggests having a will, a revocable living trust, a durable power of attorney, a living will, and a power of attorney over the property. If you cannot handle your affairs, you must name someone as your representative or executor. You’ll need someone with experience and multitasking skills to succeed in this position. What if a reliable relative isn’t up to the task? McLeod recommends assigning a member or multiple members to your advisory board to take on the necessary roles.
4) Purchasing a long-term care insurance policy is something you should give serious consideration to.
Are you in need of long-term care insurance? Independent people who don’t have a spouse or dependents who could care for them in the event of a serious illness or incapacity may benefit from purchasing such a policy, according to Next Level Planning & Wealth Management’s Andrew House. It might not be as crucial if you don’t need any of your money for your treatment, and you won’t be spending money that your future spouse will need. Lineberger is fond of certain modern life insurance plans that combine a permanent death payout with a long-term care rider is a good middle ground.
5) Collect paper and electronic files, and make written instructions.
Peace of mind and a “roadmap” are two advantages of organizing your affairs. Put together a binder with copies of your important paperwork, such as your driver’s license, marriage license, birth certificate, and insurance policies. Don’t forget to make a digital plan to ensure that the person you choose as your representative under your will or power of attorney has the legal right to access your digital assets, as is the case in many states. That includes all your online content and information (websites, blogs, artwork, music, writing, business websites, cryptocurrencies, and more) (email accounts and social media).
Your representative will be able to use this information to settle your affairs after your death, including notifying people of your passing via email and social media. Be careful to write all your revised directions for this individual to follow. Use high- and low-tech measures (such as a binder) to keep these important documents and passwords safe (a thumb drive or secure website). All relevant information, such as where the house keys are kept, should be included in your instructions. The Federal Emergency Management Agency provides a Financial First Aid Kit in case of emergency (FEMA) that can help you with this.
6) Discover your true calling.
Finally, Lineberger recommends prioritizing the development of a feeling of community as a means to your health and happiness in retirement. Make a point of connecting with others, whether at your worship or through a community organization. Seek friends and socialize. McLeod suggests preparing for a meaningful change. It may be the difference between a happy life and a miserable, lonely one, which is why this is crucial when you’re single. It’s important to pursue what drives you and to be actively involved.