Singles are People Too and Need to Save for Retirement

Small-business-idea-3Being single comes with certain perks: live by your own rules without the struggles many married couples face. However, when it comes to finances, being single can put you at a big disadvantage.

According to a recent article from The Motley Fool entitled "Planning for Retirement When You're Single," singles need to have more emergency savings than someone who's married. Why? Because you're the only source of income if you lose your job or fall ill. Single people also get fewer income tax breaks than married couples filing jointly.

Living on one income without someone else to share expenses is not easy. Single people have a harder time saving than married folks and, consequently, saving money and funding retirement accounts is definitely more difficult. Single people also have fewer options when it comes to Social Security benefits since those who are married, widowed, or divorced can claim benefits based on their current or former partners' earnings. By contrast, single folks are limited to benefits based solely on their own earnings.

Against these challenges, however, here are some great ideas for singles:

Start early. Your best bet is to ramp up your savings early and take advantage of whatever matching programs your employer has. The good news for singles is that when companies offer 401(k) matching dollars, they do it equally, regardless of marital status. So, make sure to budget money to your 401(k) to max out on employer contributions.

Make plans to take care of your health. Healthcare costs in retirement can be a significant financial hardship. The average couple retiring in 2015 at age 65 can anticipate spending about $245,000 on healthcare costs in retirement, not including long-term care expenses. Nursing homes currently run in excess of $90K a year, and around-the-clock home care can be as much as $170,000. About 70% of adults aged 65 and older will require some type of long-term care at some point in their lives. If you're single, purchase a long-term care insurance policy to cover nursing-home or home-care costs, as there's a good chance you'll need it.

Use your freedom to your advantage. When you're single, you can go where you please. This means you can pursue career opportunities that may prove more lucrative than your current job in other areas of the country. FYI: for 2016, the Social Security Administration's cost of living adjustment was $0. Zilch. This doesn't just mean that those receiving Social Security benefits won't get an increase; companies that have given cost of living raises may not give their employees any extra this year. If you're offered a higher-paying job at a new company, take advantage of the fact that you're free to uproot yourself with less stress.

Lower your housing costs. You have options for saving money on housing expenses. A smaller place might seem cramped if there's another person with you, but if you're on your own and want to increase your savings, start by downsizing your living space. If you lower your rent by $200 a month, over a three-year period, that's an extra $7,200 in savings.

Get some documentation in order. You need some estate planning and should draft a will and name your power of attorney and beneficiaries.

While being single might be some disadvantage financially, you do have the opportunity to take control of your finances—you have the option to invest your money as you see fit.

Reference: The Motley Fool (January 26, 2016) "Planning for Retirement When You're Single"

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