Retirement Planning for Singles

How the Unpaired Prepare for Retirement

woman with a rain cloud above her head.jpg
How to save for your own, personal rainy day. Anthony Harvie/Stone/Getty Images

January 30, 2015

Being single has its advantages, including independence, freedom and the potential to make spontaneous life decisions, just to name a few. When it comes to preparing for retirement, however, singles aren't really keeping up with their partnered peers. According to a recent study by the Rand Corp., just over half of single individuals say they are adequately prepared for retirement, compared to more than three-fourths of married individuals who say the same.

Single men fare a bit better than single ladies, nearly 65 percent of male singles say they are prepared, compared to about 51 percent of females.

Single people are probably not surprised by this preparedness gap. Sure, you may have fewer family-related financial obligations, but it can be hard to make ends meet on a single paycheck or Social Security check. When it comes to essential living expenses like housing, food and utilities, coupling helps reduce each member's share. Married couples are probably be more likely to make future plans for the sake of their children, whereas singles may not have the same sense of urgency. And if you are single because of a divorce, you might be so busy rebuilding your finances you're not even thinking about retirement. 

As valid as these reasons may be, they clearly demonstrate exactly single people should be saving for retirement. Here's what single people need to consider when building a retirement plan.


Build Substantial Savings. These days, it's up to each individual to save for retirement. Within a marriage, one member of the couple can lean on the savings of the other. Singles don't have the same breathing room, so it's even more critical to make savings a habit. Take advantage of a workplace retirement savings plan, such as a 401k, where contributions are drawn directly from your pre-tax paycheck.

Contribute at least as much as your employer will match, and ideally between 10 percent and 15 percent of pre-tax income. 

If you have after-tax dollars to spare, make regular contributions to a Roth IRA. You may need another source of investment income to cover expenses, and retirement income drawn from a Roth IRA is tax free.

Arm Against Uncertainty. Life insurance is important for married couples and/or parents with dependent children. Singles don't necessarily need life insurance, but should consider ways to supplement their own income should a serious disability or illness arise. Long-term disability insurance, which can help maintain your financial stability if you are unable to work, is an important safeguard for single people. 

Another smart choice for singles is long-term care insurance. This type of policy can cover medical and non-medical costs incurred if you can no longer take care of yourself. As with many other types of insurance, long-term care policies are generally less expensive if you purchase one while you are still young. Prices tend to rise for folks, beginning in their late 40s or early 50s.

Stall Social Security. To maximize benefits, married couples typically try and figure out the best timing for each spouse to begin claiming Social Security.

Single people who were never married should try and hold out as long as possible before claiming their own benefits. You can collect more than 75 percent more in monthly benefits if you wait until age 70 to claim instead of starting at age 62.

Singles who were married for at least 10 years or more but are now divorced can still collect spousal Social Security benefits beginning at age 66. Start collecting those when and if you can, and put off collecting your own benefits until age 70. Divorced widows and widowers can start collecting their former spouse's benefits beginning at age 60. At full retirement age, widows and widowers should be able to collect full benefits based on an ex-spouse's employment record. 

Put Everything in Writing. Finally, single people have to be very specific about their wishes in case they are unable to speak for themselves.

Keep your essential documents at hand, verify that the beneficiaries named to your investment accounts and insurance policies are up-to-date, and set up an advance medical directive to make your health wishes clear in case you become incapacitated.

The content on this site is provided for information and discussion purposes only. It is not intended to be professional financial advice and should not be the sole basis for your investing and tax planning decisions. Under no circumstances does this information represent a recommendation to buy or sell securities.