Retirement planning for singles: Three must-do items

1. Have a Plan

Transamerica’s survey research shows that married couples tend to be more engaged in planning for retirement. Seventy-four percent of married workers describe themselves as “very involved in monitoring and managing their retirement savings,” compared with 62% percent of unmarried workers. Seventy-six percent of married workers discuss saving, investing, and planning for retirement with family and friends, compared with 66% of unmarried workers.

“Marriage seems to have a very positive effect on saving and planning activity,” Collinson says. “It might be that they have more ability to save, but they also are more engaged in planning. You’ll never reach a destination if you don’t have a roadmap,” she adds.

2. Focus on the Guarantees

For women, greater longevity offers good reasons to focus on maximizing guaranteed income from Social Security and defined-benefit pensions. It also offers a rationale to consider certain types of annuities.

Never-married singles can boost Social Security income through a delayed-filing strategy. That’s not to say filing early is never the right move–it makes sense if you’re in poor health or have a dire need for the income and can’t work or draw on savings. But more often than not, women will come out ahead waiting at least until their full retirement age (currently 66), or closer to 70, the last age when additional credits are available.

“When I’m talking with women about their plans, I always tell them that they have to give me a good reason not to delay filing,” says Thakor. But divorced retirees may be able to file for spousal or survivor benefits on the record of a former spouse.

Social Security’s rules require that you are currently single, and had been married to your ex at least 10 years; at least 62 years old, which is the minimum Social Security eligibility age; and not already receiving a benefit greater than the divorced spouse’s benefit. You can file for spousal benefits even if your ex isn’t receiving his or her own benefits–so long as your divorce has been final for two years. Eligibility for an ex’s benefit is lost if you remarry, and you can’t file for benefits on your new spouse’s earning record until you’ve been married to that person at least one year (Here’s a summary [PDF file] of the divorced spouse rules, courtesy of SocialSecuritySolutions.com).

If you’re fortunate enough to have a traditional pension coming, make sure to do the basic maintenance chores to ensure you get what’s coming to you. Keep good records of your employment history with the plan sponsor, along with all correspondence, notices, and documents related to the plan. Keep a copy of the summary plan description, which is available from your employer. Also, ask the plan administrator if there are any restrictions on your ability to work after you start collecting benefits, or if part of your Social Security benefits will be subtracted from your pension. A list of pension-counseling services is available from the Pension Rights Center.

Immediate income or deferred annuities offer another possible path to boosting guaranteed lifetime income, Thakor says, adding that the usual buyer concerns about tying up funds may not apply for single people. “For single people who aren’t worried about leaving a legacy to a spouse or children, the idea of an immediate fixed annuity can be a little more palatable than for couples.”

3. Weave a Health-Care Safety Net

In a health emergency, spouses and children often are the first line of defense. Single people without kids may lack that natural support network–so take the time to build one. “Thinking proactively to build out your network of friends and family can be very important,” Thakor says. “Talk with your other single friends about creating a community to help one another out if something hits.”

The health safety net question naturally leads to the topic of a plan for financing any long-term care need that might arise. One option is to self-fund; industry experts say that in order to have a 95% chance of having sufficient resources to self-fund a long-term care need, you should be able to set aside $500,000 to $750,000 in retirement assets just for that purpose.

The other option is a long-term care insurance policy. Unfortunately, single women purchasing individual policies will find that policy prices have been rising. The industry has been moving toward differential pricing based on gender; Industry leader Genworth has rolled out gender-based pricing in 42 states, with more launching later this year.

“Single people could consider long-term care insurance, but if they can afford it, they probably don’t need it, and if they need it, they probably can’t afford it,” says Jan Cullinane, author of The Single Woman’s Guide to Retirement.

Cullinane is a fan of creative alternatives for singles that offer the added benefit of social support: NORCs (naturally occurring retirement communities) with support services; senior co-housing; a roommate who lives rent-free but helps with daily tasks; the Green House model that provides the services of a nursing home in a single-family residence; or a CCRC (continuing care retirement community).

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