If you are single, you may need to think twice about how you plan for retirement
According to a 2014 Gallup Poll over half of millennials (ages 18 to 29) reported being single and living on their own. Additionally, the poll found that over half of millennials polled reported not being in a committed relationship.
While this might not seem like a big deal, it certainly is troubling where retirement is concerned.
The Savings Roadblocks Singles Face
Your retirement plan is unique to you. While you are single, you want to be sure that you are saving in a way that will benefit you most in your later years. For example, as a single individual you will get away with a smaller life insurance policy. But you may want to invest more in paying for long-term care coverage than a married couple with children might. This is because married individuals can rely on each other or their children to care for them. If you are single with no dependents, you will need to invest more money in a strategy for mental and physical care.
Additionally, a single-person household may find that their savings patterns differ from a two-person household. In one of two ways. First one, it will either be harder to save because you are making less of an income. The other one would be that it is easier to save because you lack the expenditures that a married household may accrue.
The spending habits of singles differ from the spending habits of married or attached individuals. You may find that you need to build a large emergency savings account. In case that a medical emergency happens or you become unemployed.
Perhaps the biggest expense single individuals face, is with housing; according to the Bureau of Labor Statistics, married individuals in their 20s pay over $7,000 less per person in housing costs than single individuals do. This means that, as a single individual, you have less money left over for retirement savings.
Adjusting Your Retirement Plan
Ultimately, you retirement plan should be tailor accordingly, to satisfy you. The retirement plan that works for your married friends may not be the same plan that works for you.
One example of adjusting your retirement plan is to put aside a larger lump sum toward your annuities. Setting aside large sums of money whenever possible can drastically increase your retirement income. You want to be sure to pad your retirement savings a bit more than a married couple would, especially to account for the difference in basic costs, such as housing, that single individuals are faced with.
Your Social Security strategy will also change if you are single in your later years. A retiree who is married, divorced or widowed can opt to receive benefits based on their partner’s earning record, instead of based solely on their own income record. This means married individuals may receive higher payments than a single individual might. Then, when you take your Social Security pay, it will differ.
Where Singles Shine in Retirement
The upside of retiring single is that you are the sole individual in charge of your retirement income. By saving smart, you may even find that you are able to save just as much money as your married compatriots and that your budget may not be as frugal.
Being in charge of your retirement income also means you can spend it how you like. Retirement plans for plan for married couples are typically compromises. A single individual does not have to make these financial compromises.
Additionally, just because you are single now does not mean that you will be by the time you retire. It is beneficial to know the challenges and roadblocks unmarried individuals face in retirement savings in order to build a financially sound future and to adjust your savings accordingly.
Remember that everyone’s journey toward retirement is personal and should suit you. Your personal goals, needs and dreams should all be considered as you build your retirement plan. Your plan, is essentially designed to only work for you. Whether you are single or married, you should always sit down with a financial adviser. Try to discuss what you would like to get out of your retirement plan. You should also frequently check your portfolio’s progress and adjust your future plans accordingly.