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How to prepare to retire “Solo” Thumbnail

How to prepare to retire “Solo”

Are you over age 65 living in a one-person household? If so, you have a lot of company. Per the US Census Bureau, there were 37.9 million one-person households in the U.S. in 2022. This represents 29% of all households (versus only 7.7% in 1940 and 13% in 1960), Of these one-person households, 41% were aged 65 and older.

The share of people living alone has increased every decade from 1940 to 2020, with the largest increase between 1970 and 1980. Census Bureau demographers predict that even more elders will be “aging solo,” or living alone in the future, without a spouse or partner to assist them if they need care. Why is this happening?

· The baby boomer generation had fewer children than their parents.

Families are smaller, and more than 15 million older adults have no children (1 in 6 seniors). This percentage is expected to grow. Older people are projected to outnumber children for the first time in U.S. history by the year 2035. There will be 78 million people 65 years and older compared to 76.4 million under the age of 18.

· People are living longer.

Experts estimate that 20% of people living in the U.S. will be older than 65 by 2030. Per the US Census Bureau, even with a slight dip in life expectancy due to the COVID pandemic and the opioid crisis, today’s seniors are living longer—and will be more likely to have a disability than their parents’ generation. A longer life expectancy does not necessarily mean a longer life with good health.

· More individuals are divorced or never married.

Today’s seniors are less likely to have a spouse to help care for them. The “gray” divorce rate (age 55+) more than doubled the past 25 years, concurrent with an increase in people who never married or partnered.

· Less family support is available to older adults.

Increased mobility has led to some families drifting apart. Fewer elders report they can rely on adult children or siblings for care. Per the AARP, today’s seniors have an average pool of seven family members who can help; by midcentury this will drop to an average of three or less. In fact, there are more “only children” supporting the care needs of divorced parents, stepparents, and grandparents. With longer lifespans, some adult children may need care support before their parents.

Being single creates different challenges for retirement planning. You may have been single all of your life, or are now widowed or divorced. You must rely on your income and assets alone to build an income stream for a longer lifespan, and to budget for increasing living expenses and health care costs on your own. As a solo aging adult, what should you do? Plan Ahead!

Decide who can help you - and ask them in advance.

Strong relationships with friends and family can help you in good times and in times of need. But it is important to make sure they don’t take advantage of your independent status or create serious financial burdens for you. Take extreme care before turning over your financial matters and decisions

to anyone else, whether a loved one or a professional. Stay actively involved in the decisions and work with a team of people you trust to help make decisions that are in your best interests.

Consider carefully who to select as your financial and health care representatives. Evaluate the possibility of engaging a corporate trustee to manage finances, should you ever become incapacitated, and work with your financial planner or attorney to make your plans. For health care needs, ask a trusted friend or a relative to help you, or hire a geriatric care manager to coordinate and oversee care.

Think now about where you want to live - if you can no longer care for yourself on your own.

Consider whether your needs could be met in your current home, or if you should consider other housing choices. Research senior living options, including supportive senior living communities such as continuing care retirement communities (CCRCs) and other facilities designed for aging elders.

Plan for your future health care.

It may be hard to envision that you may not always be healthy and independent. But chances are you may have to live with mobility, sensory and/or cognitive challenges. Take steps now to put advance directives into place. Name a health care proxy while researching your living options. Learn how much you can afford to pay for care. Legally designate someone you trust to help you pay your bills and manage your money in the event you can no longer do so. This is an important decision since seniors can be at high risk of financial elder abuse.

Review your finances.

You may discover you need more funds for retirement than originally envisioned. Periodically review your investment portfolio. Build effective financial backup plans. You may need more emergency cash in savings in case of illness or an accident, given you only have one income stream. Consider adding disability and long-term care insurance protection and/or working part-time for extra income.

Set up your estate plan.

If you have an estate plan, periodically review the documents to ensure your wishes will be carried out. Having an estate plan will prevent confusion or misdirected bequests at your death. If you do not have an estate plan, make it a priority to get it done.

The key documents in most estate plans include:

o Will

o Power of attorney (POA) for financial matters

o Durable power of attorney for health care matters

o Health Insurance Portability and Accountability Act (HIPAA) release authorization

o Living will

o Revocable living trust

Review your designated beneficiaries for all retirement accounts (IRAs, employer-sponsored retirement plans, pensions) as well as life insurance policies and annuities. Document clearly how you wish to distribute your remaining assets to your heirs. Remember this includes digital assets and accounts. Ensure that your executor or trustee has proper authority to access and manage these items. Talk to your attorney about keeping your digital planning secure and up to date.

Do not neglect your social needs.

Loneliness can be damaging to your health. It has been widely documented that seniors who live alone are at higher risk of social isolation. Set up solid social networks while you are active and healthy. Think about what you need to feel connected and supported. This may include volunteering, spending time with friends and/or engaging with others in different generations in a range of community settings.

Finally, what if you find a partner later in life?

Entering into a committed relationship or getting married later in life requires adjustments. Review your insurance coverage, emergency fund and future income plans. Have a frank discussion with your new partner about how to divide assets in the event of divorce or death. If either of you has an ex-spouse or child(ren), consider managing your finances and estate plans separately rather than jointly. Hire an attorney to create a new estate plan and work with a financial advisor to discuss how to preserve your wealth. Review your plan on a regular basis to make sure it still meets your needs.

Clearly there is a lot to consider if you retire “solo.” Questions? We are here to help.

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Best regards,

Janet Rhodes Friedman, CFP®, CDFA®, MBA Janet@PlanWithFPS.com


Financial Planning Solutions, LLC (FPS) is a Registered Investment Advisor. Financial Planning Solutions, LLC (FPS) provides this blog for informational and educational purposes only. Nothing in this blog should be considered investment, tax, or legal advice. FPS only renders personalized advice to each client. Information herein includes opinions and source information that is believed to be reliable. However, such information may not be independently verified by FPS. Please see important disclosures link at the bottom of this page.

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