Investing

Retiring Single: 5 Strategies to Consider

More people are living longer, which brings a new set of challenges to planning for retirement. But retiring single can be especially challenging.

February 03, 2020

If you’re planning on retiring single, you aren’t alone. According to the U.S. Census Bureau, 21.3 million U.S. residents age 65 and older were unmarried in 2016. These seniors comprise 41.9% of all unmarried people age 65 and older.

Planning for retirement is challenging, from building an income stream for a longer lifespan to budgeting for increasing living expenses and health care costs. These and other retirement planning issues can be especially pressing for singles, who need to prepare financially without the decision-making and income support of a spouse or partner.

Here, Wells Fargo Advisors offers five tips to consider when it comes to setting a course for those solo retirement years.

1. Create a financial fallback plan

Retirees may discover that there’s a gap between what they thought they would need for retirement and what they discover they actually need. As a single retiree, you may not have a second income stream to rely on in case your finances are unexpectedly disrupted (for example, by dealing with a major health issue or illness).

To plan for the unexpected, it’s important to periodically review your investment portfolio and build effective financial backup plans. Such contingency planning could involve a higher cash emergency savings total than couples might need and could require considering more robust disability and long-term care insurance protection than couples might select. You could also choose to take a part-time job for extra income.

2. Build a network of professional advisors

You might appreciate the independence and freedom of your lifestyle. But with autonomy could come a reluctance to seek advice and ask questions regarding important financial matters.

However, it’s especially important for singles to consider forming a team of trusted experts—including a financial advisor, an accountant, an attorney, and health care providers—to rely on for professional advice and guidance.

3. Count on family and friends—to a point

It’s important to have strong relationships with friends and family to help you out in good times and in times of need. However, it’s equally important to make sure they don’t take advantage of your independent status or create serious financial burdens for you.

For example, you should take extreme care before turning over your financial matters and decisions to anyone else, whether a loved one or a professional. Make a point to stay actively involved in those decisions and work with a team of people you trust to help make decisions that are in your best interests. Evaluate the possibility of engaging a corporate trustee to manage finances, should you become incapacitated.  (Learn more about retirement savings mistakes to avoid.)

4. Get estate and wealth-transfer plans in place

Many people drag their feet when it comes to estate planning. According to a 2019 survey by Caring.com, more than half of American adults don’t have estate-planning documents such as a will or trust. Even if you’ve put some documents together, are you sure you have what you need to ensure your wishes are carried out?

Here are the key documents that form the foundation for most estate plans:

  • Will
  • Power of attorney (POA) for financial matters
  • Durable power of attorney for health care
  • Health Insurance Portability and Accountability Act (HIPAA) release authorization
  • Living will
  • Revocable living trust

Additionally, you could prevent confusion and misdirected bequests by managing other critical planning documents: Carefully designate beneficiaries of assets in IRAs, employer-sponsored retirement plans, insurance policies, and annuities. Lay out clear directions for the distribution of remaining assets for your heirs. Also, don’t forget about your digital assets and accounts.  Will your executor or trustee have proper authority to access and manage these items?  Talk to your local attorney about keeping your digital planning secure and up-to-date.

5. Plan for change

Although you may be single now, that could change during retirement—or even before. Entering into a committed relationship or getting married could mean making adjustments in your financial life now and down the road to and through retirement. Look at your insurance coverage, emergency fund, and future income plan.

Think about having a frank discussion with your new partner about how you want your assets to be divided in the event of divorce or death. If there are ex-spouses or children in the picture on either side, consider managing your finances and estate plans separately, rather than jointly.

With the assistance of your financial advisor and estate-planning attorney, you can get a basic estate plan put in place, and, as appropriate, discuss other strategies for preserving wealth.

One final important tip: Set a time on your calendar for a regular review with your team of professionals to keep all your documents up to date.

Additional Resources

These 10 documents can become a solid foundation for any estate plan.

Are you prepared to handle a personal financial crisis?

Trust services available through banking and trust affiliates in addition to non-affiliated companies of Wells Fargo Advisors. Wells Fargo Advisors and its affiliates do not provide legal or tax advice. Any estate plan should be reviewed by an attorney who specializes in estate planning and is licensed to practice law in your state.