Retirement Planning for Singles

Retirement planning for couples can be difficult, however, when you are single, the planning can be that much harder. 

While many Americans will retire single for various different reasons (death of a spouse, divorce, changing lifestyles), the one thing senior singles have in common is that their retirement-planning needs can be very different from that of their married peers—and many of them are unprepared. 

A study by the Rand Corporation indicated that single people are at a greater risk of not saving enough for retirement than their married counterparts.  This may be because there are more forces eating away their income and resources.  For the newly widowed or divorced, housing costs may jump as well as living expenses. 

Furthermore, singles miss out on tax breaks.  Tax experts say that single adults will face steeper tax challenges as they near retirement age.  Without tax credits, a spouse exemption, and no one to realize the benefits of filing jointly, singles can take a large tax punch during earning years.  “To lessen the tax bite, I advise my single adult clients who own their won businesses or have side businesses and freelance income to set up a solo 401(k).”  The contributions consist of a salary deferral and a profit-sharing distribution. 

Once singles stop working, they must be smart about planning for withdrawals from their retirement accounts.  Assets like life insurance and alimony become less reliable sources of income, thus, singles should have other resources in place.

See Jane Hodges, Retirement-Planning Tips for Singles, The Wall Street Journal, Oct. 5, 2014.

Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.