You’re single and enjoying a fulfilling life. The last thing on your mind is retirement. Hanging out with friends sounds much more appealing! But planning for the next chapter of your life should be on the forefront of your mind for one reason: You alone are solely responsible for your future. You can’t use someone else’s savings or benefits as a safety net. You have to provide for yourself by yourself. Here are some areas you need to consider.
Get on a Budget
When you’re single, it’s easier to fly by the seat of your pants when it comes to your money. After all, it’s all yours, right? The problem is this: Without a plan for where your money will go, you’ll end up spending it all. You need a monthly spending plan that includes paying off debt, establishing an emergency fund, and investing part of your income for retirement.
Find Your Number
Retirement isn’t an age. It’s a financial number—the amount of money you’ll need to live on when you retire. And that number depends on what you want to do when you no longer have to work. Do you want to travel? Start your own business? Volunteer at church? Once you know what you want to do, you can use my free online tool to find out how much money you need to be investing each month in order to enjoy that retirement dream.
Start Investing and Keep At It
Unfortunately, singles tend to save less for retirement. In 2016, Ramsey Solutions commissioned a study of more than 1,000 U.S. adults to discover the state of retirement in America. Among other findings, the study showed that less than 50% of singles are saving for retirement, compared to 65% of married couples. And of those singles who save, only 30% have saved $25,000 or more, while more than 50% of married couples have saved at least that much.
Even though singles are saving less, they are 100% responsible for funding their retirement years. If you’re single, you need to start saving as much as you can as soon as you can. Once you’re out of debt and the house is paid off, throw your investing into high gear and let time and compound interest work for you.
The upside of being single is that you can make all of your financial decisions by yourself. That’s also the downside. That’s why you need to find someone to hold you accountable for how much you’re spending and saving. You need to find someone to encourage you to stay on track—and to remind you of your goals when you get distracted. That person can also help you make financial decisions if you need a second opinion.
Some singles think only married people need disability or long-term care insurance. That’s not true. You need both. Your employer probably covers short-term disability, but you need long-term coverage in case you’re out of work for an extended period. You also need long-term care insurance to cover any assistance you may need with bathing, dressing, eating or other similar tasks if you become seriously ill. You can’t assume that your children or family would be able to care for you if something happens to you.
State Your Wishes
When you’re married, your spouse can make decisions for you if you become seriously ill or incapacitated. That’s not an option for singles. You need to work with a lawyer to create a health care directive and power of attorney for your medical attention and finances. Singles often choose a family member, but if your family lives far away, choose someone close by in case of emergency.
Whether you’re single or married, I recommend talking with an investing professional periodically to track the progress of your investment portfolio. They can also answer questions and keep you from making a bad decision when the market dips and turns. Your future is too important to go it alone.