A friend of ours, Deborah, recently lost her husband after a long illness. During the weeks and months leading up to his passing, Deborah took care of Jim. It wasn’t until after the funeral that she gave much thought about what living alone would mean. Their house had been Jim’s dream. She liked it, too, but now she wondered if she wouldn’t like something closer to town. And there was another thing, too. He was in charge of their finances; now that he was gone, she didn’t know where to start.
“Jim always took care of everything,” Deborah told me. “I know we didn’t worry about money, but I also didn’t know how much we had or where we were keeping it.”
Or what to do with it, for that matter.
In many ways, Deborah’s story is typical. Nearly 54 percent of women in the United States at or near retirement find themselves living alone. Of those who are currently married, many will find themselves living at least part of their retirement alone as they outlive their husbands. Attaining a secure retirement is a challenge for nearly everyone and women like Deborah have unique challenges because they live longer, often outliving their husbands.
If you find yourself close to retirement and alone, here are several things you can do to ensure a positive and comfortable life for yourself.
Have a plan and keep saving
Choosing when to retire will have a huge impact on how you retire. By taking a look at your current savings, projected social security income, you can get a pretty good idea of when you can stop working. Working a little bit longer can have several benefits: it ups your social security income in many cases, it shortens the duration you’ll need to pay for with savings, and often offers a supportive social experience in the meantime. Beyond picking a date, it’s important to have a financial plan in place that includes tax and investment strategies. Getting the help of a financial planner or investment advisor to help with the plan can pay dividends, especially if, like Deborah, you are going through or have recently been through a transition.
Get strategic with social security
If your finances and health permit, delaying Social Security is a wise move for single women. For example, if you wait until full retirement age to claim your benefits, you could receive 30-40% larger Social Security payments as a result. Then, for every year you wait to claim Social Security after the age of full retirement up to age 70, your monthly payments get about 8% larger.
Delaying social security is not a strategy in and of itself. While delaying social security as long as possible provides for the greatest monthly benefit, it does sometimes makes sense to claim your benefits early. For example, if you’re a widow, you may find your deceased spouse’s full retirement benefit exceeds yours. In that case, taking that benefit as soon as possible instead of taking your own can make good financial sense. You can also take the survivor’s benefit while waiting for your benefit to amass. Assuming your payment is larger, you can then switch to your own benefit at age 70. Interestingly, remarriage after the age of 60 doesn’t impact your ability to claim survivor benefits. The single biggest mistake that most retirees make is to simply take the benefit with no strategy in mind; it can make good sense to work with an accountant or financial planner when crafting that strategy.
Weave your safety net
As a single woman, there’s more to a secure retirement than growing and protecting your nest egg. Having a robust social safety net is a good place to start: it protects your health to have strong social connections and it can come in handy if you fall ill or need a little extra support.
Having a formal plan in place and designating an adult child or other trusted person as a decision maker in case you can no longer make your own financial or healthcare decisions is also a must. A living will can help offer guidance to those decision makers about how you’d like your healthcare handled if you are unable to make decisions. Some older single people without adult children create revocable trusts and designate banks or trust companies to be their trustees; this can help you avoid financial abuse.[i] Professional fiduciaries can also fill this role.
A financial support team can also be very helpful in supporting you in a single retirement. For example, at our firm, we work to support our clients with a collaborative team that includes, as needed, a trust attorney, accountant, financial planner, and investment advisor. By working as a cohesive unit on their behalf, our clients are able have the peace of mind that no stone was left unturned in their quest to build a successful, secure retirement.