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When you get older and are on your own, you’ll have several retirement issues to tackle. And solo agers face these challenges without the aid or financial support of a partner or adult children.
According to Sara Zeff Geber, author of Essential Retirement Planning for Solo Agers, solo agers may be single, divorced, childless, or who live a long distance from family. Are you several years younger than your spouse? You may become a solo ager should your spouse pass away. Now that we’ve defined solo aging, here are a few retirement tips geared toward helping solo agers.
1. Prepare for long-term care
Solo agers need to consider how they will pay for long-term care, including in-home care services, relocating to an assisted living facility, or moving to a nursing home.
“They need to have a plan for long-term care,” advises Jay Zigmont, a certified financial planner and founder of Childfree Wealth in Water Valley, Mississippi. “The plan may include long-term care insurance or having enough in retirement to pay for long-term care.”
How soon should solo agers begin planning for future long-term care? Zigmont encourages his clients to have a plan for long-term care by the time they reach their mid-40s. Long-term care coverage is something solo agers may need to use earlier than other retirees.
“Healthcare is one of the biggest challenges for a solo ager, especially long-term care,” says Daniel Granucci, a certified financial planner at Iron Path Wealth Management in Sandy Hook, Connecticut. “Without the day-to-day support of a spouse for activities of daily living like eating and cleaning, one may end up needing in-home care much earlier and for longer.”
2. Use health savings accounts
A health savings account is a good vehicle for saving for the health care needs of solo agers. If you have a high-deductible health plan with your job, then you may have a health saving account offered with your health plan. A health savings account is a tax-advantaged account, and you can use it to pay for qualified medical expenses not covered by your high-deductible health plan.
“If someone believes they may be a solo ager, they should max out an HSA from an early age and invest the funds as they would their other retirement dollars rather than spending it each year unless there is a true emergency,” Granucci advises. “An HSA provides a current year tax deduction, tax-deferred growth, and tax-free distributions for medical expenses.”
But be aware that the option to put savings in health savings accounts ends when you sign up for Medicare. Once you enroll in Medicare, you will not be able to contribute pre-tax dollars to a health savings account.
3. Get a partner
It may be an obvious solution, but you don't need to be married for this one.
Financial planning may be difficult when you are a solo ager, so reach out for some support. There’s no need to go it alone.
“Planning finances is hard when you are solo,” Zigmont says. “Having an accountability partner or someone to bounce things off of can help.”
An accountability partner could be a friend or a certified financial professional. Both could help you get a handle on your savings and spending.
“The challenge is both to save and to spend at a rate that gets you to your goals,” Zigmont says.
4. Get creative with your housing
Solo agers can save money on housing costs by choosing shared housing. Think the Golden Girls, the popular sitcom from the 1980s with four senior ladies living in a house together.
“Find a way to live with others,” Geber says. “The Golden Girls model, that is home sharing, and I think that’s excellent.”
Consider each housing option carefully. Which will work best for you? Is a continuing care or assisted living facility in your future? Or are you healthy and looking to keep housing costs down?
“Explore creative living arrangements as you age, and make plans early,” says Justin Pritchard, a certified financial planner at Approach Financial in Montrose, Colorado. “That might include looking at traditional facilities and exploring creative ideas with friends and loved ones. But even with communal living, it’s smart to have a backup plan.”
5. Bolster your finances
As a solo ager, there is only you saving money for your retirement. Be an aggressive saver.
Sheri Conklin, a certified financial planner at Conklin Financial Planning in Roseville, California, recommends the following financial tips for solo agers.
“Save as much as you can before retiring, work a part-time job, in addition to your full-time job, if you can,” Conklin says. “Make sure all debt except your mortgage is paid off. Look at how your spending will change when you retire. Learn a new skill from which you could make money once you leave your full-time job.”
6. Do solo estate planning
Solo agers need to make a plan for a day when they are physically unable to manage their affairs.
“It’s critical to plan for incapacity as a single person. Without a spouse or partner who might automatically step in and manage your household and financial affairs, you need to get proactive,” Pritchard advises.“Draft documents with an estate planning attorney to prepare for the unexpected. In particular, exploring power of attorney, POA, and creating medical directives is smart.”
And while you are working with an estate planning attorney, Zigmont recommends getting a will as a solo ager. A will is a legal document that carries out your wishes for your assets when you die.
7. Make a budget
Solo agers could be divorced, widowed, single, without children, or live far from family.
As a solo ager, there is just you saving and planning for the future, and it is important to be aware of where your money is going each month.
“Many solo agers get in the habit of spending their money however they see fit without ever understanding where their money is going or creating a budget,” says Tiffany Johnson, a certified financial planner at Piece of Wealth Planning in Atlanta, Georgia.
Review your monthly expenses and spending. You want to know how much money is coming in and going out each month. Establishing a budget will help.
8. Sign up for work retirement plans
Solo agers should make the most of employer-sponsored retirement plans. Does your employer offer a retirement plan? Are you contributing? And does your employer offer a match? These are all important questions for solo agers to ask.
“Make sure they understand whether their company offers a match and then try to contribute that amount at least, if possible,” Johnson says. “They do not want to leave free money on the table, and this is the first step to saving for retirement.”
9. Consult a financial planner
If solo agers are not sure they are on the right track with their retirement savings, they may wish to discuss things with a financial planner.
“Speak to a financial planner to get a clear picture of their financial future. Many solo agers do not have many people to lean on for financial support or guidance,” Johnson says. “They should not hesitate to seek help from a financial planner so they can better understand what factors they need to consider when planning for retirement.”
Corey Voorman, founder of Voorman Investment Counsel in Plymouth, Michigan, recommends that solo agers choose fiduciary financial advisors for their planning needs.
“A fiduciary investment adviser is legally obligated to work towards your best interests and disclose conflicts of interest,” Voorman says. “Fee-only fiduciary firms work in your best interests and do not get paid by selling investment products.”
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