Careful, thoughtful planning when you’re over age 50 and retiring alone can help you save for the financial goals you have.
Quick takeaways
Right now, about one quarter of Americans age 60 and older live alone.
When it comes to retiring, doing it solo is no different than retiring with a partner; both involve planning for various financial impacts, from health care to a retirement budget. But because you are doing it alone, it does involve an extra layer of scrutiny to help protect you and enable you to meet your financial goals. Here are some ways to help prepare.
Retirement isn’t just about managing your expenses; it’s also about the joy, hopefully, of a post-work life that allows you a little space to consider “What’s next?” That may be the lifestyle you, as a solo retiree, are thinking about—perhaps filled with far-flung travel, maybe closer to home with volunteer projects—as well as the support system you may need as you age. Those retirement goals may help serve as a framework for the next steps, including a savings review and budget.
There’s a financial impact to the age at which you decide to take Social Security. You are able to elect benefits at age 62, but the total you’ll receive is reduced, permanently. If you can wait until what’s called your full retirement age, or FRA, your benefits increase in two stages.
First, your benefits will increase if you wait until age 65 or 67, depending on your birth year. (If you were born before 1960, your FRA is age 65; if you were born after 1960, it’s 67.) Benefits increase again at age 70. So, the longer you can delay starting your Social Security benefits until age 70, the higher your benefits may be. Here’s an example of the impact.
| Age of Social Security benefit | Social Security amount | Percent of possible benefit |
|---|---|---|
| 62 | $1,400 | 70% |
| 67 (born in 1961) | $2,000 | 100% |
| 70 | $2,480 | 124% |
No one can predict exactly what your retirement future holds—the specific amount you’ll spend or have saved. But you can probably start to map out some placeholder retirement budget numbers. This interactive
In addition to Social Security, you may have other retirement savings sources. Consider:
- Will you receive a pension or annuity? If you don’t have heirs, you may want to talk to a financial professional about how to maximize your payout on either.
- What are your distribution options from retirement savings? Accounts including IRAs and 401(k) may have choices based on your marital status. And if you’re divorced, there may be obligations for splitting 401(k) benefits or an IRA, which can affect withdrawal options. A financial professional can help.
Now that you have a proposed budget and your total retirement savings so far, you can see if you have enough for what you think you’ll need as retirement income—the amount you’ll draw from savings or receive from other benefits once you retire. (If you have a Principal account, log in to access a
Are all those aligned? If so, great; if not, a financial professional can help you decide next steps. Perhaps you’re able to reduce proposed expenses by downsizing, or maybe you decide to work a few more years to help build up savings.
One way to help protect your proposed retirement budget and savings is to continue to build an emergency fund, as much as you’re able. That way if something unexpected pops up, you’ll have resources to help. Many advise at least three to six months in your emergency fund; these strategies can help you find the best way for you to
Longer lifespans and the health challenges that come with aging both figure into how you think about retiring alone. For starters, there’s health insurance. If you’re able to stay in the workforce until age 65, you’ll can transition to
Then there’s long-term care; it may be as simple as help for some daily needs as you age, or a transition to a different living arrangement. Some average care costs can help you get started to figure out
If you’re single, your plans may be straightforward—but they might not be. Taking the time to develop clear wishes and instructions can ensure that important financial and healthcare decisions aren’t left to the courts or to people who don’t know you. An estate plan—including the basics of a will, up-to-date beneficiary designations, a healthcare directive, and a power of attorney—can help ensure others understand your wishes, especially if you’re unable to make decisions yourself. It also provides clarity for trusted loved ones during what may be difficult times.
Principal® customers have access to
Another helpful retirement planning tool: A personalized
