Retirement planning for single seniors

Shelly Gigante

By Shelly Gigante
Shelly Gigante specializes in personal finance issues. Her work has appeared in a variety of publications and news websites.
Posted on Sep 29, 2021

There are plenty of perks to retiring single — not having to clear impulse buys with a partner, not having to financially support aging in-laws, and never having to compromise on where (or whether) to relocate. But without a spouse to share their living expenses or act as a caregiver should the need arise, the uncomfortable truth is those entering retirement without a partner also face potentially greater financial risks.

Whether you are divorced, widowed, or never married, financial professionals say single people planning for a comfortable retirement must take steps as early as possible to secure their future. That includes:

Keep in mind that your financial picture will differ, perhaps significantly, depending on your prior marital status. It may also be influenced by whether or not you have children or relatives who would be willing to help support you as you age, said Jason Heller, a financial professional with Coastal Wealth in Ft. Lauderdale, Florida.

Planning for higher housing costs

Heller said those headed for a solo retirement need to recognize that they may need a bigger financial safety net than their coupled peers. Why? They don’t have a second source of income on which to rely — or an extra set of hands at home to help out.

“Everyone, whether married or single, has the same basic planning needs,” he said. “But singles absolutely need to have more saved because they don’t have the redundancies or shared expenses with a spouse.”

Indeed, research reveals that housing costs consume a relatively higher percentage of a single retiree’s annual income from sources such as Social Security benefits, personal savings, pensions, trusts, and annuities.

Married couples get to share joint expenses, such as their mortgage, groceries, and utility bills, which makes living costs more manageable. And many do so with two incomes — typically a paycheck during their working years and Social Security checks when they retire. Depending on their financial picture, some married couples who file their income taxes jointly may also be able to reduce their tax burden.

That’s a financial fact of life that exists throughout their younger years as well, which makes it harder for their single peers to keep up.

A 2017 TD Ameritrade survey found that singles make an average of $8,800 less annually in personal income than their married peers ($52,900 versus $61,700), and they are far less likely to own a home (58 percent versus 90 percent), which could potentially help them build wealth.1  

The survey also found that fewer singles are saving for retirement than their married peers (44 percent versus 63 percent) and roughly one-third (34 percent) of unmarried Americans expect to be very secure in retirement, compared with 52 percent of their married peers. Nearly half (46 percent) of singles fear they may outlive their savings, versus 38 percent of married partners.

Saving for health care costs

The possibility of higher health care costs in retirement is another possible setback for many singles, said Heller.

A recent survey by the Employee Benefit Research Institute found that out-of-pocket spending for recuring health care expenses was roughly the same for both single and coupled households. But the average total for nonrecurring expenses for singles age 65 and older was more than double ($7,122) what couples paid ($3,162). The differences were greatest for nursing home costs and home health care, which suggests couples likely benefit from having their spouse or partner available to deliver care. (Learn more: Single seniors pay more for health care)

The best way to counter these financial headwinds? Live within your means, avoid high-interest debt, and save early and often.

Where possible, it is also often wise to take advantage of pretax workplace savings tools, such as Flexible Spending Accounts (FSA), which can be used for eligible health, dental, and vision care expenses not covered by your health insurance plan.

If offered by your employer, you may also benefit from participation in a Health Savings Account (HSA). HSAs are paired with high deductible health plans and funded with pre-tax dollars. But unlike an FSA, which is funded yearly on a “use it or lose it” basis, the dollars you contribute to your HSA can remain in your account to pay for qualified health care expenses in future years, including retirement. A portion of your HSA can also potentially be invested for growth. Here again, it helps to consult your human resources team or a financial professional for guidance on how best to take advantage of such plans. (Learn more: Health Savings Accounts for retirement planning: Pros and cons)

Protecting against risk with insurance coverage

Life insurance coverage can be an effective tool for protecting against the risk of an untimely passing.

Those with children generally appreciate the need for having adequate life insurance coverage while their children are minors, and many parents purchase sufficient coverage to ensure that their family will be provided for (up to and including college costs) in the event they (the policyowner) should pass away unexpectedly.

But singles may benefit from life insurance, too. If you have parents or relatives who might need your support as they age, have significant debt (especially loans that are cosigned by a loved one), or wish to leave a financial legacy, you should speak with your financial professional about the pros and cons of owning life insurance. (Learn more: Single? 3 reasons why you might still need life insurance)

“Knowing where they are financially and putting the proper risk protection in place early on can provide peace of mind, knowing that if anything happens, your beneficiaries will be alright,” said Laurie Madenfort, a financial professional with Coastal Wealth in Ft. Lauderdale, Florida. “That is priceless.”

Another form of protection, disability income insurance, can replace a portion of your income if you should become injured or too ill to work, which is particularly important to consider for those who rely exclusively on their own income.

Finally, singles without a partner are potentially more likely to incur the high cost of long-term care (LTC) services as they age. Some financial services companies offer a hybrid, or combined, life insurance policy with long-term care benefits.

“Even if you are wealthy and think you can self-insure, the last thing you would want to do is liquidate assets to pay for care,” said Madenfort. “Singles, especially, should consider LTC insurance to provide that care and protection should they need it since they are not married and would otherwise have to rely on family and friends for help.”

Madenfort stressed that long-term care coverage offers another benefit as well. It liberates your loved ones to come visit you by choice, rather than obligation.

“Being a caregiver requires a lot from your loved ones — it’s exhausting and it can take their livelihood away,” said Madenfort. “You want to see your loved ones when they come to visit you or want to stay and help.”

Creating an estate plan

While it may be uncomfortable to consider our own mortality, we all need estate planning documents in place to protect our interests both during our lifetime and after we are gone. (Learn more: Wills and the basics of estate planning)

For example, beneficiary designation forms for your life insurance policy and retirement accounts identify the people to whom you wish to distribute those assets after you die. Similarly, your last will and testament clarifies which individuals (or favorite charities) will inherit your property when you pass on. (Related: Beneficiary mistakes)

“If you have underage children, a will is the most important document as it states who will become the guardian in the event something should happen to you and there is not another capable parent available to take care of them,” said Madenfort. “In that case, the courts would appoint a personal guardian to care for the children and that may not be the person(s) you would want if you were alive.”

Estate planning documents can also help protect your interests while you are alive. For example, a living will spells out your preferences for end-of-life medical care, sparing your loved ones from the difficult task of having to guess during a moment of grief, while an advanced health care directive names an individual to make medical decisions on your behalf if you become incapacitated. Similarly, a durable power of attorney enables you to designate a trusted friend or family member to make financial decisions for you if you are unable to do so on your own.

Such documents are essential to all financial plans, but they can provide added comfort to singles who wish to ensure that their estate will pass on according to their wishes and that their financial and medical well-being will be tended to, if needed, by those they trust most.

If you were previously married

As noted, your financial plan will differ depending on whether you were previously married or whether you have children.

One of the biggest financial setbacks for singles who were never married is that they do not benefit from a second Social Security check from a spouse, and their benefit is limited to their own earnings history.

Divorced and widowed retirees do not have a second Social Security check coming in either, but they may still be positioned to collect a higher monthly spousal benefit or survivor benefit (based on their ex-spouse’s earnings record) than their never-married peers.2

Your need for long-term care coverage may be mitigated if you have a child, friend, or family member willing to step in and assist you as you age.

Single seniors, especially those without children, should make an effort to cultivate a support network of family and friends, in part for their emotional well-being, but also because friends and family can help each other out and potentially delay (or prevent) the need for home health aides. (Learn more: Projecting the costs of aging in place)

To help offset some of their expenses, some retirees without a spouse choose to live with a roommate, a concept know as cohabitation that has gained momentum in recent years as the baby boomer population redefines retirement. (Learn more: Senior living and the cohabitation option)

Others are turning to home-share programs to enable them to age in place. Such programs involve opening your home for a nominal fee or in exchange for basic household tasks (think cooking, shoveling snow, and laundry).

Conclusion

Retirement, regardless of marital status, can be an exciting life stage filled with possibility. Those who enter their golden years solo, however, face unique financial risks. By planning ahead for higher expenses, purchasing insurance protection as needed, and fortifying their estate plan to secure their interests, they will be far better equipped to enjoy life after they leave their job and focus on what matters most — friends, family, and personal fulfillment.

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TD Ameritrade, “Hitched or Flying Solo: Who’s Better Off Financially?” September 21, 2017.

Social Security Administration, “Retirement Benefits.”

The information provided is not written or intended as specific tax or legal advice. MassMutual, its employees and representatives are not authorized to give tax or legal advice. You are encouraged to seek advice from your own tax or legal counsel. Opinions expressed by those interviewed are their own and do not necessarily represent the views of Massachusetts Mutual Life Insurance Company.