As Americans live longer, the meaning of retirement continues to shift. The wave of aging Baby Boomers ensures more active retirements on the horizon. However, longer-term retirement planning has become more challenging than ever with the downturn of the economy.
Adding to this challenge of planning for a longer retirement are the large numbers of people who will retire single. Reports show that 43 percent1 of seniors over age 65 are single. This growing phenomenon occurs for a number of reasons – midlife divorce, outliving a spouse, or people who choose not to marry. Those in retirement alone face a greater financial burden.
Despite these challenges, single retirees can address six keys areas to better prepare themselves for retirement.
Plan for retirement as early as possible.
The cost of living for singles is 40 to 50% higher than for married individuals. Single retirees do not have another source of income to act as a financial cushion. Having a financial plan can ensure singles are prepared for retirement.
Build and sustain wealth.
With retirements lasting between 10 to 30 years, financial pressure has increased. Establishing your own independent retirement savings, investing aggressively, and recognizing the impact of inflation can safeguard finances in later life.
Understand your income and expenses.
When income sources and expenses are out of balance in retirement, single retirees use their accumulated savings to meet spending needs. Using reserves can increase the risk of outliving one’s money.
Consider changes in housing.
Preparing for normal aging changes may include downsizing and moving out of a familiar neighborhood. Housing is expensive, and having a roommate during retirement can be beneficial socially, emotionally, and physically.
Establish a social network for emotional (& physical) well-being.
The transition from working to not working can be tough. Feelings of identity loss and loneliness can be avoided by taking an active role in the community and staying socially connected.
Devise a comprehensive health strategy.
Without the extra resources and care a spouse can provide, single retirees have a greater need to plan for health care expenses. Finding the right insurance and granting medical power of attorney to a trusted friend or family member can protect singles if they should ever be unable to speak for themselves.
Whether single or a couple, pre- and post-retirees can benefit from having a plan for later life to avoid the financial pitfalls of retirement.