The decision of how and when to take Social Security is a much bigger decision than most people realize.
If you're one of the millions of pre-retirees who is heading solo into retirement, you’re definitely not alone.
The U.S. Census Bureau reports that 19.5 million U.S. residents 65 and older are unmarried.
And while not all unmarried adults identify as single (since some have a partner or cohabit with one) the data reveal that single retirees are a growing demographic.
Often, retirement planning information is geared toward married couples, but that is starting to change now that the retirement landscape looks significantly different than it did over a generation ago.
Retirement planning can feel overwhelming as it is, regardless of your relationship status. So whether you've never been married or are divorced or widowed, here are some factors to consider as you look ahead to your own retirement future.
Some studies suggest that single or unmarried people may delay retirement for different reasons. Research shows that single men and single women in the United States tend to retire later than married couples.
One reason is simply financial. Single retirees typically don't have as much retirement savings as married retirees and therefore choose to work longer to catch up on retirement savings.
But other non-financial reasons also drive the choice to delay retirement.
For many people—single and married alike—the workplace provides meaningful social interaction and friendships as well as a source for finding fulfillment and purpose. And for unmarried adults who are satisfied with their jobs, there is less pull to retire early.
According to Dr. Howard Friedman, author of The Longevity Project, it's not love or romance that promotes long life, but simply being involved in the lives of others—our family, friends co-workers, or even through volunteering.
Staying connected to others in community is one of the reasons some single seniors choose to move to a retirement community. But that's not your only option. Some single retirees look into co-housing options or even consider house sharing—whether for social or financial reasons or both. House sharing can look like a short-term rental (think Airbnb and VRBO), or a more long-term housemate arrangement (think Golden Girls.)
Even if you have good health, forming and maintaining strong community connections now that will carry beyond retirement will promote your longevity in addition to healthy habits like nutrition and exercise. And continuing to form connections after you retire is essential, too.
Single retirees who have never been married and have no adult children to care for them in their senior years need to be intentional about building a support network. Don't wait for an unexpected crisis to form your support team.
Ask yourself which family members, such as nieces, nephews, younger cousins or other friends who feel like family, can you reach out to now to begin forming the support you can rely on in case of an emergency?
Beyond caregiving, you'll also want to designate a power of attorney (POA), the person you want to entrust with the legal authority to make financial decisions on your behalf if you become incapacitated.
Once you've selected a power of attorney and they accept, it's essential to have a conversation with them about your wishes on decisions that matter to you. Don’t leave them guessing and left to bear the weight of a decision that they don’t have clear guidance from you about.
You may also want to consider designating a health care proxy, which is like a power of attorney, but it is someone you trust to make medical decisions for you in the event that you're unable to. Let your health care providers know so they have this information on file.
Another item to make sure you've got covered as a single person is drafting a will or a living trust, spelling out your wishes for what happens to you and your assets after you're gone. Without a will, the laws in the state where you reside determine those decisions.
Along with your will, you'll need to choose the executor of your estate, also known as a personal representative, depending on the state in which you live. This is a different function from a POA. Where a POA has the legal authority to act when you're living but not in a position to choose, the executor handles your finance and ensures all your estate and financial matters are taken care of once you pass on.
Lastly, if you haven't done so yet, be sure you've designated your beneficiaries on your retirement accounts. Talk with your advisor about this, since new rules passed by Congress have limited or eliminated the "stretch IRA" in some cases.
If you don't already have long-term care insurance, you may want to look into your options. Because if you face a chronic illness or disability—some estimates say that well over half of retirees will at some point—the costs of long-term care could easily eat away at your retirement savings.
Some employers will allow you to purchase a long-term care insurance policy if you're still working. But there are other policies out there to choose from that are not tied to your employment.
You may want to find out what the average cost of care may be in your area so that you can realistically estimate how much money you may need if the need for care arises.
Since Social Security typically comprises the bulk of most retirement income, it's important to get this one right. Because how and when you claim Social Security has a serious impact on your monthly income in retirement. (For more, watch our video class "How to Maximize Your Social Security Benefits.")
While married couples have more options when it comes to applying for Social Security benefits, for single retirees, the fact that there are fewer options can simplify your decision
If you've never been married, your Social Security check will be calculated based only on your earnings.
But if you're widowed or divorced—yet were married for at least 10 years—you may qualify for additional Social Security benefits based on your partner's employment history.
Once you've reached full retirement age, you can begin withdrawing from the asset you've likely paid into most of your working life.
If you've been making financial decisions independently for most of your life, it can be a mindset shift for some never-married adults to include others in the process of personal finance decisions for retirement. On the other side of the spectrum, those who are divorced or widowed may be at a disadvantage if their spouse was the primary financial decision-maker.
Even if you've had a financial planner to help you with personal finance matters during your career, you may want to talk with a retirement advisor who can help you navigate the specific steps to take on your journey to retirement—whenever you decide to retire.
If you have specific questions for your situation, schedule a complimentary call with one of our advisors today. Visit https://www.greatwatersfinancial.com/talk