“Just because you’re retiring single doesn’t mean financial planning isn’t important. In fact, because planning for retirement is solely on your shoulders, having a comprehensive financial plan is critical to help you maximize your independence in retirement.”
Conversations about financial planning are often positioned in the context of how married couples can navigate retirement together. However, it’s becoming increasingly common for people to plan for and enter retirement as singles, according to the story in twincities.com, “Your Money: Financial planning tips to help singles.”
Rainy Day Funds. For singles with just one income, having a robust emergency fund is much more critical than for couples. When you’re married and you’re laid off from your job, you hopefully have the option to dip into your partner’s income stream to help you in what might be a tough financial situation.
The rule of thumb is for individuals to save up about three-to-six months of living expenses in a safe, liquid account. For singles, it should be a little more: six-to-nine months of living expenses in an emergency fund. That will help to ensure that you have plenty of cushion, if a financial storm happens.
Long-Term Care. You should also try to better protect your independence in retirement with a plan for long-term care (LTC). This usually means buying a LTC insurance policy. It can also mean self-insuring, if you have the financial resources to do so. A LTC insurance policy will help you maintain your independence by potentially allowing you to stay in your own home, in the event you need senior care in the future.
Life Insurance. If you’re single with no dependents, you may think there’s no use owning a life insurance policy. In some instances, that may be the case. However, just because you’re single doesn’t necessarily mean there’s no need for you to own life insurance. The death benefit of a policy can be used to provide a legacy to a charity, help cover your funeral expenses or defray the fees and taxes that may come up when your estate is settled. If you buy permanent life insurance, the cash benefits from the policy can act as an additional income source, if you need it while you’re still alive.
Estate Planning. There’s also value in having an up-to-date estate plan. A will can help to ensure any assets you have at death go where you want them to. Legal documents like a power of attorney and a living will also allow you to have control over your medical decisions, in the event you become incapacitated.
Reference: Twincities.com (July 1, 2017) “Your Money: Financial planning tips to help singles”