Most personal finance guidance is directed at couples, but about half of women over age 65—and one of every five men—are single. The standard strategies and conventional wisdom for planning for retirement don’t always work well for singles—particularly for “solo agers” who have no partner or grown children. The risks are elevated for these people—the worst-case outcome of poor planning for someone who has close family is becoming a burden to a loved one…but the worst-case scenario for a “solo ager” is becoming a ward of the state.
Bottom Line Personal asked Sara Zeff Geber, PhD, a certified retirement coach and author of Essential Retirement Planning for Solo Agers, about the planning complications and considerations facing people who are aging on their own…
The most popular senior housing option is a poor choice for solo agers. A recent AARP survey found that more than three-quarters of adults age 50 and up want to remain in their homes as they grow old rather than move to a retirement community. Real estate trends confirm that Baby Boomers—people now in their 60s and 70s—are not selling their homes as quickly as many earlier generations did as they aged.
Problems: “Aging in place” doesn’t work well for solo agers. As the years pass, their ability to drive often declines…and friends and acquaintances move away, leaving these singles isolated. Isolation can be an issue for couples, too, but couples at least have each other for companionship…and the odds are reasonable that at least one will be able to drive safely even at an advanced age.
Without advance planning, solo agers also don’t typically have anyone on hand to summon if they have a health emergency…or to provide assistance when they’re less physically capable—something as simple as a sore foot can make life extremely challenging for someone aging on his/her own.
What to do: Solo agers should consider moving to senior housing, even if that’s not their preference. Taking this step before a health or financial problem forces a move means that you can explore the options and select senior housing that holds some appeal rather than feel forced into whatever happens to be available on short notice. If you can’t bring yourself to make this move yet, at least investigate the options so you’re not starting completely from scratch if it suddenly becomes impractical for you to continue living at home.
Solo aging creates estate-planning issues. If you don’t have a spouse or adult children, you’re likely to face an estate-planning dilemma—whom should you appoint to represent your interests if and when you are unable to speak for yourself? A trust company, bank trust department or attorney could serve in this role, but most people don’t want someone they barely know making critical decisions on their behalf. Even if you are willing to let a veritable stranger handle your financial affairs, would you be willing to name such a person as your agent in your health-care proxy? This individual might one day have to make life-and-death decisions for you. A sibling or trusted friend might seem like a reasonable choice, but if this person is about the same age as you, there’s a reasonable chance that he/she won’t be available when needed.
What to do: Start strengthening your relationship with someone who is at least 15 years younger than you. An honest and competent niece or nephew often is the best choice, but a much younger cousin or friend also could be an option. Spend enough time with this person so that you can make an informed decision about whether you can truly trust his judgment. If you cannot find any appropriate younger person to serve in this role, you might have to name a professional representative. If you live in California or Arizona, a licensed professional fiduciary is an appropriate choice—these states have programs designed to register fiduciaries to serve this function. In other states, contact your local Area Agency on Aging or Council on Aging to ask if a fiduciary can serve as your guardian or agent on estate-planning forms. That’s not ideal, but it’s better than leaving it to the state to determine who will make decisions on your behalf.
Also: Divorcees should review their estate-planning documents—and their financial account beneficiary designations—to confirm that their former spouses are not still listed as beneficiaries or agents.
Per-capita expenses can be significantly higher for singles. Surprisingly, it costs more to live on one’s own than as one-half of a couple. The typical one-person household has monthly expenses of $3,693, according to the US Bureau of Labor Statistics, which represents a roughly $500-per-month premium compared with 50% of the typical couple’s $6,372 expenses. Key reason: Housing costs—two people can live in a home or apartment for essentially the same price as one. And housing costs can be very steep these days—they consume nearly 40% of the typical single person’s budget. In fact, housing can be pricey even for people who’ve paid off their mortgages—the costs of home maintenance, homeowner’s insurance, utilities and property taxes have climbed sharply lately.
Other expenses seem like they should be more or less half as much for aging singles as for couples—but it doesn’t always work out that way. Example: It seems reasonable to assume that health-care costs will be halved—after all, if there’s only one person, there’s only one set of Medicare or insurance premiums, and only one person’s medical bills. But as people age, they’re increasingly likely to require assistance from time to time due to injuries or illnesses. Couples typically provide much of this support for each other, while singles often must rely on paid caregivers. That can be tremendously expensive—one year of in-home care costs an average of $75,000.
It also might intuitively seem that a single person’s grocery bills should be half of a couple’s—but it’s more cost-efficient to feed people together than on their own. Financial company SoFi estimates that the grocery bills for a couple are only 20% higher than those for a single person, though this can vary greatly depending on cooking and dining habits. Also, many travel costs, including hotel rooms and rental cars, are just as expensive for solo travelers as for couples.
What to do: Living on one’s own will lead to higher per-capita expenses, so singles must budget accordingly. The high cost of housing for singles should serve as added incentive to downsize and even consider senior housing or home sharing. Solo agers also should look for options that are designed—and priced—for single people. Example: When traveling, they might book trips with companies that specialize in running, hiking and cycling group tours for solo travelers—these are much less likely than other tours to charge a hefty “single supplement” for traveling alone.
The most common Social Security claiming decisions are not the best choices for singles. It’s very common for people to claim their Social Security benefits at age 62, when they first become eligible to do so…or at full retirement age, which is in a person’s 66th year if they were born between 1943 and 1959, or 67 if they were born in 1960 or later. But well under 10% of beneficiaries wait until age 70 to claim, even though that’s what leads to not only the largest possible benefit check each month, but the greatest total benefits for most beneficiaries.
Waiting until age 70 to claim Social Security benefits is an especially attractive strategy for solo agers, because it offers a safety net. Single people are less likely than married people to have two of the other big aging safety nets—grown children who can take them in or help them out in a financial emergency…and a valuable home that could be sold to raise funds if needed.
Social Security works as a safety net because you can’t outlive it—you’ll receive your monthly benefit for as long as you’re alive, and those benefits will increase over time to keep pace with inflation. But this safety net might not be strong enough to support you unless you maximize your monthly benefits by waiting until age 70 to claim. Example: If your full benefit is $2,000 per month, you would receive only $1,400 a month if you claimed at 62…but $2,480 per month if you wait until age 70, assuming that your full retirement age is 67. That extra money each month could make a massive difference in determining how effective your benefits are as a safety net if your retirement savings fall short.
Demographics offer another reason why claiming at 70 is especially likely to be the best strategy for single people. The longer you live, the greater the financial upside of claiming late—and more than two-thirds of people who are on their own after age 65 are women, who tend to live years longer than men.
What to do: Wait until age 70 to claim Social Security if you’re single unless claiming sooner is necessary to pay your bills and/or you have serious health issues that significantly limit your life expectancy.
