Conversations surrounding financial planning are often presented in the context of how married couples can navigate retirement together. What is becoming increasingly common, at least in our experience meeting with clients, is that a great many people are preparing for and entering retirement single.
We thought, in light of the fact that it’s Fourth of July weekend, we’d focus on how singles can be better prepared to make the most of their independence.
For singles who have only one income to rely upon, having a robust emergency fund is perhaps even more important than it is for those in a relationship. If you’re married and your car breaks down or you lose your job, you could potentially tap into your partner’s income help you work through what could be a rocky financial situation.The typical rule of thumb is for people to have 3-6 months’ living expenses in a safe, liquid account. For singles, we often recommend trying to save 6-9 months’ living expenses in an emergency fund to better ensure you have enough of a cushion if a financial rainy day occurs.
To better protect your independence in retirement, you should have a plan for long-term care (LTC). This may mean purchasing a LTC insurance policy or it may mean self-insuring if you have the financial wherewithal to do so. Having a LTC plan in place will help you maintain your independence by potentially allowing you to stay in your own home in the event that you do require care in the future.
If you’re single and have no dependents, you may believe there’s no merit in owning a life insurance policy. That may be true, but just because you’re single doesn’t automatically mean there’s no need for you to own life insurance. The death benefit can be used to provide a legacy to a charity of your choice, help cover your funeral costs or cover fees and taxes that may arise when your estate is settled.
Plus, if you purchase 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.
Assuming you don’t spend your last dollar the day you take your last breath, there’s value in having an up-to-date estate plan. Having a will in place helps ensure any assets you have at death go where you want them to go. Legal documents like a power of attorney and a living will allow you to have control over your medical decisions in case you become incapacitated.
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.