Single? 3 Financial Challenges You Might Face in Retirement

(Maurie Backman)

Being single has its benefits. It means living by your own rules and enjoying your financial resources without having to share them with a partner.

But being alone can also be challenging in the context of retirement. Here’s why — and what to do about it.

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1. You may need long-term care

Being married does not guarantee that you will not need some kind of long-term care during retirement. But if you are married and share a life with someone, that person may be able to provide some care so that you can minimize the amount you have to pay for it. If you are single and live alone, you may have to spend more on a home health aide or even assisted living. And the costs there can be astronomical.

You can prepare for the cost of long-term care — and help offset it — by purchasing long-term care insurance. The ideal time to do this is usually in your mid-50s, at which point you’re more likely to get a discount on premiums, based on your age and health. Having that coverage can save you a world of stress down the line, all while helping to ensure you can get the care you need.

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2. You will only have one set of Social Security benefits to collect

Married couples can play with different Social Security filing strategies. And a popular one is that the least earn the benefits of the claim while the other delays their presentation for a higher monthly benefit down.

If you’re single, you can’t use the same approach to Social Security. But that doesn’t mean you can’t maximize your benefits.

If you plan to work until age 70, you can delay your filing until that point and give your monthly benefit the maximum boost it’s eligible for. The result? A higher monthly salary to look forward to for the rest of your life.

3. You’ll only have access to one IRA or 401(k)

Married people who save individually in an IRA or 401(k) plan can pool those resources during retirement for a higher total household income. If you are single, you only have your savings to tap into. And while it is true that you only have one mouth to feed, not two, many of the other expenses you have to pay, such as housing, will be largely the same whether there is one person living under your roof or two.

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But you can make up for not having access to a second retirement savings plan by boosting yours. Start by increasing your savings rate by 1% or 2% each year so you can build a solid nest egg. At the same time, invest your savings wisely so that your money can grow. This means not playing it too safe in your retirement plan, but going heavy on stocks while you still have many years of work ahead of you.

Avoiding expensive retirement plan fees is another good way to end up with a bigger nest egg. If you have a 401(k) plan, aim to put more money into index funds, which commonly charge much lower fees than actively managed mutual funds. Also, consider ditching your 401(k) and rolling over to an IRA if administrative fees keep mounting. (If your employer offers a 401(k) match, save enough to claim it — but put added funds into an IRA, instead.)

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Being single can be a challenge when it comes to retirement. But with careful planning and the right strategy, it certainly doesn’t have to be.

The $18,984 Social Security bonus most retirees completely ignore

If you’re like most Americans, you’re a few years (or more) behind on your retirement savings. But a handful of little-known “Social Security secrets” can help ensure a boost in your retirement income. For example: one easy trick can pay you as much as $18,984 more…every year! Once you learn how to maximize your Social Security benefits, we think you can confidently retire with the peace of mind we’re all looking for. Simply click here to discover how to learn more about these strategies.

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