Preparing for a Single Retirement?

There can be significant economic challenges involved in preparing for a single retirement without a partner or spouse to share the financial responsibilities. On average, women tend to live longer than men, meaning you will have more years ahead that you will need to finance. Death of a spouse, divorce, or the choice to remain single can leave women financially vulnerable in retirement. When facing retirement head-on, preparedness is a key component of securing financial stability and independence. Here are strategies you can use to plan and prepare for a peaceful, independent and financially sound retirement.

Tip #1: Have a Plan

A 2020 study found that around 51 percent of unmarried women have not saved for retirement. By comparison, that number drops to 24 percent for married women.¹ The problem is, it’s likely you’ll be spending 10, 20, 30+ years in retirement, so having substantial savings is instrumental. The Department of Labor recommends that retirees prepare to live on 70 to 90 percent of their pre-retirement income in order to maintain their usual standard of living.

If you’re living on a single income, saving for retirement may be extra challenging.²Developing a plan with plenty of time to prepare can help improve your retirement savings.

Tip #2: Prepare For Long-Term Care

Someone that is turning 65 today will have almost a 70 percent chance of needing some type of long-term care services and support in the coming years.³

With that being said, it may be beneficial to consider a long-term care insurance policy to help cover such costs. Even if you have family or friends who can help, long-term sickness or injury may require care beyond what your family can help with physically and financially. How will you be cared for and who will pay for the care? Assisted living and long-term assistance can be incredibly expensive.

Tip #3: Consider Optimizing Social Security Benefits

Women in the United States generally retire around the age of 66.⁴ Understanding the nuances of Social Security benefits is crucial for women with almost 55 percent of the people receiving Social Security benefits being female.⁵ Optimizing claiming strategies, considering spousal benefits, and being aware of survivor benefits can help women maximize their Social Security income during retirement. It provides an inflation-protected benefit that will last as long as you live. When it comes to drawing from Social Security, it may be advisable to delay this for as long as you can without going past the age of 70.⁶ If you can delay until that age, your income will increase significantly each year. Even though your Social Security benefits can become accessible at 62, your full retirement benefits will only be available once an individual reaches their full retirement age, which is determined by their birth date. Any benefits that are received before reaching your full retirement age are reduced by a percentage, which is also determined by birth date. This ranges between 25 and 30 percent.⁷

According to the Social Security Administration, the reduction in benefits is typically permanent. If you were to access your benefits at 62, the percentage removed would remain even after you have reached your full retirement age.⁸

However, if you were to wait longer than the full retirement age to access your benefits, you can receive a retirement credit, which is a percentage based on how long you waited, up to the age of 70.⁹

Retirement planning can be difficult enough as it is, but this can substantially escalate for singles. With the right planning, however, you can create a stronger future for yourself. And as always, speak with a financial professional if you have any questions.