By Shane Cummings, CFP®, AIF®, Wealth Advisor & Director of Technology/Cybersecurity
According to ConsumerAffairs, 28% of seniors live alone – that’s 14.7 million Americans living on their own. This brings up a lot of important factors to consider for singles, whether you’re planning for retirement or already engaged in it. From having the right team in place, to how legacy planning is done, if you’re a “solo ager,” you should be aware of important planning considerations that will likely impact you.
Preparing for old age alone: Financial basics
If you’re living without a partner or spouse, your income sources in retirement may be less diversified and more concentrated. It’s fairly normal for both members of a couple to receive some form of retirement income, whether it’s Social Security, pensions, and/or income from a portfolio. For a single retiree, there’s just one stream of payments; you may not be able to benefit from being in a household with multiple retirement accounts and sources of income.
And don’t forget inflation. Price inflation spiked during the pandemic; currently, the specter of price inflation is with us in 2025. To keep pace with cost-of- living and price adjustments, having reliable sources of retirement income is essential.
Assembling your support network
As we age, we face the possibility of memory- related issues and cognitive decline. A spouse or partner is typically the best person to watch for and assist with these challenges. But for single seniors, this is not an option. It’s important to consider whom you can rely on to assist in the future should you be impacted by memory issues, or any significant health decline. A good place to start is with your extended family members. Is there a family member who is willing to serve as a trusted contact or steward of your financial assets if you are no longer able to manage these yourself?
If you have family members you can trust yet aren’t living nearby, it’s important to create a plan early for how they may be able to support you if you need that support in the future. This may involve creating appropriate estate plan documents authorizing them in some capacity as decision makers or looking into emerging technologies they can use to help in an emergency, such as home cameras or apps for monitoring your living space.
Additionally, as your financial advisor, we can assist with helping you manage your investments, advising you on how your accounts can be modified, and trusted contacts added, to help address and plan for a range of life events – both anticipated and unanticipated.
Estate planning is essential for solo agers
A capable estate planning attorney is also critical to your support network; they can help to draft documents that meet your needs as you age – and as relevant laws and your own circumstances evolve.
If you have identified trusted contacts who can help you in the future, documenting your wishes in a legal format such as a trust or Power of Attorney helps ensure that your wishes are codified and can be shared with your advisory team, such as your financial advisor and the custodian of your investments.
Without these in place, you could potentially encounter roadblocks in granting decision- making authority to your successor when it is most critical. A trust can also be designed to involve a professional fiduciary, such as a trust company, to help make financial decisions on your behalf in the event that a family member or trusted friend is not able or willing to serve in that capacity.
Here’s a worst-case scenario: If documents are not drafted correctly, and person ends up in a state of diminished capacity and unable to make their own financial decisions with no successor decision makers in place, this could lead to their case being referred to local government authorities for evaluation.
Healthcare planning as a solo ager
Another important topic that a trusted attorney can provide advice on? Advance care directives. If you’re single and have a medical emergency and are unable to make medical elections for yourself, an advance healthcare directive can give other family members the authority to act on your behalf.
Some hospitals and care facilities require a directive to be in place and will not accept instructions otherwise. Along a similar vein, single seniors should be thinking about what their wishes would be for their care should they eventually need to move to assisted living or need memory care.
Long-term care considerations
Long-term care (LTC) is another important planning consideration. LTC policies can be quite expensive, depending on the coverage limits and features – and can be cost prohibitive for many.
Yet going through the analysis process can at least inform you about what options you have if this kind of care is required in the future. How would it be funded? Absent a LTC policy, would your own savings and investments suffice?
Savings projections for aging alone
If you’re planning to age alone, you may need to save more of your income early, well before you retire, as a hedge against unforeseen expenses in retirement. In this way, you can benefit from the compound growth of your investments over a longer time frame.
Your unique financial situation might also lend itself to alternate solutions – such as the potential for utilizing a reverse mortgage if you encounter diminished financial assets. In this case, you’d need to have sufficient home equity built up and plan to remain in your home long-term.
Planning for health care is best done early
LTC planning is an issue best considered early, as these policies are usually less expensive if purchased at a younger age. LTC policies may offer the option of inflation- adjusted benefits. Though this will likely increase the cost of the policy, health care costs have historically increased more than the average rate of inflation and don’t seem to show signs of slowing down.
If your chosen alternative is to self-fund your expected future care costs, it’s possible that you should avoid being overly conservative with your investments. Performance that keeps up with and exceeds the rate of inflation means your real purchasing power is not declining over time.
Financial planning for singles: We’re here to help
There are so many compelling reasons why single savers need to explore all of these considerations early –and begin planning ahead.
Having the right partner, such as a financial advisor, to help inform and recommend how to address solo aging issues can be a critical component to a successful retirement path. Halbert Hargrove’s financial advisors are here to help support and guide you through creating a retirement plan. Reach out to us to get started.
Disclosure;
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