According to the United States Census Bureau, unmarried individuals comprise 45 percent of all American citizens 18 and older. Even though one might find the unencumbered liberation of singledom appealing, retirement can pose problems for this group. The truth is, singles run greater economic risks as they need to cover all the daily expenses alone, including utilities, housing, and car ownership. Couples have a huge advantage in this respect since spouses can share these costs. On the contrary, a single person needs almost 70 percent as much as a couple to enjoy a similar lifestyle upon retirement. So, for them, careful financial planning is not an option; it is a necessity. If you are in this group, you must build sufficient assets if you want to lead a comfortable life post-retirement, and that involves devising foolproof retirement planning strategies. Find more details below:
Reconsider Your Housing Requirements
Like many people, you too may plan on paying off your mortgage before retirement. However, unforeseen circumstances may prevent this from happening. In this case, it is better to sell your property and buy a less costly house or rent out your property. The monthly rent or the proceeds from the sale of the house can be added to your retirement savings, which will boost your future assets.
Ensure Your Lifestyle Fits Your Income
Take the initiative to improve your long-term lifestyle by adjusting your short-term practices. The reason we stress upon this point is that singles are prone to overspending because they have no dependents. So, you need to learn to live life without everyday luxuries. Curb your expenses and maintain your retirement goals by establishing a fixed budget.
Start by taking your monthly income into account and identifying how much money you spend on what products and services. You can further divide this number into three distinct categories:
- Fixed Expenses
- Variable Expenses
Pay close attention to the amount you allocate to each of these categories. For example, fixed expenses, as the name suggests, are unavoidable and remain more or less the same every month. These include car bills, housing costs, utilities, etc. Among variable expenses, you have things like groceries, clothing, entertainment, and travel. Your savings include your emergency funds and your non-registered savings.
Once you decide on the percentage of your income to allocate to each category, you can make adjustments as and when required. For example, healthier retirement assets can only be achieved when you prevent your variable expenses from surpassing your savings. Also, your total spending should never exceed your total income; otherwise, you might have to live in debt at the time of retirement and fail to meet your long-term goals.
Choose Your Course of Action
Get one thing clear – the final retirement decision rests in your hands. Your financial advisor, your friends, and your parents are merely there to guide you; so do not take their words as the law. It’s your life, so you should know what’s best for you and your finances. For example, you will get a lot of advice about how delaying your Social Security benefits until age 70 can increase your total income. What these “experts” neglect to mention is that waiting for so long without any employment becomes justified only when your other sources of income like annuities, investments, and pensions, fulfil your expenses; otherwise, delaying Social Security may force you to withdraw from your assets earlier than you should have, causing problems later on during retirement. So, your goal should be to maximize your overall retirement income instead of picking a Social Security strategy in isolation.
Singles should never underestimate the importance of solid retirement planning strategies. In fact, they should pay more attention to retirement planning because they need to save up enough money so they can lead their desired lifestyle in the later part of their life.