Retirement planning for single people has its own unique set of challenges and opportunities. This is true whether you are a widow, divorced, or you never got married. While it’s true that in some ways retiring single is less complex, it is certainly true that other aspects need more attention.

It is important to note that there are many items to consider in your planning regardless of your relationship status. This article will focus on some of the unique challenges and opportunities for solo-retirees.

Estate Planning

Many aspects of estate planning, from medical decisions to inheritances, default to your spouse if something were to happen to you. If you don’t have a spouse, things can become considerably more complex.

The three documents that you’ll want to consider drafting are a Last Will and Testament, an Advance Directive, and a Power of Attorney. These documents allow you to make decisions ahead of time as well as name trusted people to make decisions on your behalf in the future.

Many people will name children in these roles, but what if you don’t have children? You may need to name a professional trustee or agent-in-fact to make these types of decisions. This will commonly be an attorney who has a legal responsibility to act in your best interest.

The majority of families in the US are blended families. If you plan to get married and become a blended family, it is shockingly easy to disinherit your children without proper estate planning.

Many states have laws that give the spouse rights over your children so careful planning must be done to ensure your money is going to your intended recipient. Prenups and postnups are awkward to discuss, but they can be the best tool in this situation.

Tax Planning

Multi-year tax planning is often overlooked for all retirees, married or not. However, it has become more important to evaluate its applicability to your situation with the new SECURE Act.

The SECURE Act also eliminated the stretch IRA for many people who were previously eligible. If you inherit a qualified plan, then you will need to do proper tax planning to determine the most advantageous way to access the funds over the next 10 years.

Many people have heard about the “marriage penalty,” but did you know there is also a “widow penalty”?

It is not hard to imagine a scenario where a widow’s income is very similar to the couple’s combined income. The widow’s penalty can cause that income to be taxed at higher rates. Roth conversions can help with this, among other strategies.

Insurance

Many people believe you no longer need life insurance once you’re able to retire because you are, by definition, financially independent. I generally agree with this, but there are still specific situations where someone is dependent on you and would be financially harmed if you were to pass away.

Have you considered long-term care insurance (LTCI)? LTCI has had its share of headlines recently, and for good reason. It is very expensive, but that’s because long-term care is expensive.

The probability that you will ever fully collect from a LTCI policy is low, but if you ever needed to, then the decision to purchase the policy will turn out to be one of your greatest financial decisions.

This mathematical paradox is why it’s important to take other factors into consideration. For instance, the more you value leaving an inheritance the more likely you would want LTCI.

Social Security

For anyone in good health and financially planning to live a long time, you are generally better off to wait until 70 to maximize your Social Security benefit. There are special rules for widows and divorcees.

For example, a surviving spouse can claim an ex’s benefit as early as 60 without impacting their own benefit. A divorced person may collect on their ex-spouse’s benefit if the marriage lasted 10 years or longer.

The rules are very specific so make sure you know the options available to you given your specific circumstance. The last thing you want to do is leave money on the table.

Retirement planning in general has a lot of moving parts no matter your relationship status. Some items can be simpler for the solo-retiree than a married couple, but in many other areas the decisions involve more careful planning.

Download Robert’s ebook, 9 Mistakes to Avoid When Retiring Solo, if you’re on the path to retirement and need guidance.

Which of these areas have you considered in your financial planning? Which have you not? What steps can you take now to better prepare for retiring single? Please share with our community.

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