Singles, couples need different retirement planning
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While the same principles apply in planning for retirement for singles or for couples, the way plans are implemented is different.
So says a report on Marketwatch, which points out that singles will “likely” have a shorter retirement and that there are fewer specific stages of retirement to plan for.
The common factors to planning for couples and singles include the need to balance spending on one’s standard of living with making sure the money doesn’t run out prematurely.
In addition, the way portfolios are constructed is pretty much the same, with the need to diversify, minimize costs and heed your risk-tolerance comfort level.
Overall, tax planning is pretty similar, as well — such as considering conversion to a Roth IRA when you’re paying a low marginal tax rate — as is insurance planning: If you think you won’t be able to afford covering the cost for a health risk or other hazard, consider insuring against it.
Regarding the length of retirement, while it’s true that the complication of having to plan for the “second to die” is not a part of the equation, it doesn’t necessarily follow that the retirement period will be shorter if the person retiring is a woman, since women have longer lifespans and are likely to spend more years in retirement than men.
But it is true that a given withdrawal rate from the portfolio can be safer for a single person than for a couple of the same age, and that funding basic needs with a bond ladder of a given length can also be safer for a single person than for a couple of the same age.
One other benefit, though, is that self-insuring for long-term care requires a significantly smaller amount of savings than doing so for two people—although women will still need to put away more in anticipation of needing LTC than men would.
Their longer lifespans and the likelihood that they are the ones providing care when part of a couple means that they’ll probably have to pay for care for themselves in retirement, since there may not be a family member willing or able to provide it for them.
When a couple plans for retirement, the report says, there are “two-people” and “one-person” stages; that’s not true for a single person, since the potential for drastic changes in spending and/or income on the death of a spouse is eliminated.
That also means that tax planning for a single person in retirement is less complex, with fewer changes in income levels driving taxes up or down.
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