Widowed, divorced, and never-married senior citizens face special concerns as they age. With that in mind, experts provided five lesser known advisories that single seniors should consider.
1. Write a “love letter” stating your legacy.
Just as newly widowed seniors might have found themselves searching for a safe-deposit box key, needing an unknown online password, or wondering if they knew about all their late partner’s accounts, single seniors need to think about who will need what information (including medical directives) when they pass on or are no longer capable of providing it.
“A trust is the document that makes the decisions for your assets after you are gone. It’s critical we do it for folks under 55,” says Jonathan DeYoe of DeYoe Wealth Management*, but he only sees 30-35 percent under 55 who have their trusts in order.
Aging people need to communicate their intentions with their children. “Seniors today never communicated about this stuff, kids don’t know where anything is, don’t know that parents desires are,” says DeYoe. “We recommend a love letter be written around Thanksgiving to chronicle this stuff. Tell your story. You want to get in writing somehow: ‘In my life the most important thing I learned was…’”
Those senior citizens who have already lined up their beneficiaries are not off the hook, either. John Carl, founder and president of the Retirement Learning Center, recommends conducting a “Beneficiary Audit”.
“If you are a single senior, you might not have always been single. And anyone who lives a full life goes through changes. Each time they open an IRA, invest in an annuity, buy life insurance or invest in a retirement plan – they must name a beneficiary. Those designations are essentially contracts,” says Carl.
“So even if your will and trust work is up to the minute on where you want your assets to go if something happens to you – having a legacy beneficiary on one of these products (contracts) – means the money will go to that legacy beneficiary (i.e. ex-spouse, etc). Conducting a beneficiary audit is essential for the single senior.”
* Clear and prominent disclosure: Securities are offered through LPL Financial
2. Get a second opinion.
Second opinions are commonly recommended following serious health diagnoses, but they are useful in other ways later in life.
Senior citizens often find themselves targets for fraud, and singles might not have a confidant to consult about a proposition that seems too good to be true (or even simply good). “I just say if you are single senior, get a second opinion,” says DeYoe. He also advises getting a second attorney to take a look at your trust, “to make sure that what you want to have happen will happen.”
3. Plan for inflation.
“For younger single seniors, inflation is your biggest risk,” says DeYoe. “It eats away at buying power every single year and you don’t even see it. If you don’t manage for inflation, you end up running out of money.”
Stephen J. Butler, President of Pension Dynamics Corporation, offers another tip for not running out of money before life’s end: single seniors should take the time to understand bond funds. “They generate higher levels of interest than CDs. If you understand why capital values can fluctuate on bond funds, then you can learn to ignore them.” A booklet titled “Spending Your 401(k), How to Live a Life and Not Outlive Your Retirement Resources” is available on his website.
4. Make a backup plan.
Worst-case scenario, what if you do outlive your financial resources? It’s especially a reality for women, who tend to outlive their spouses. “Single senior women generally have accumulated a smaller amount of retirement savings than their male counterparts,” says Carl. They will need to play catch up, he says, and he recommends the following:
- Make catch-up retirement contributions, if eligible.
- Work part-time in retirement.
- Understand the effects of divorce and death on maximum Social Security benefits.
“With costs going up, 15-20 years from now we’re going to see more and more folks who don’t have enough money, they’ve invested very conservatively," notes DeYoe. “We’re going to see that being a huge drain for states—taking care of people. [Long term care] can cost $6K a month easy, going much higher than normal inflation. Insurance companies are trying to push California to increase rates by 40 percent.”
Singles should look into long term care insurance, offered in California and other states, says DeYoe, as it helps protect the assets of those who need long term care after their heath insurance has run out.
5. Stack the odds for happiness in your favor.
As retirement age approaches, many people know they should have a plan for retirement funds, but not enough people think to plan retirement fun. When work is your whole life, it doesn’t occur to some to plan for a fulfilling life after work, and that dissatisfaction can intensify when the retiree doesn’t live with a partner.
“Stay in touch with your former coworkers,” advises Ken Budd, Executive editor of "AARP The Magazine." The AARP recently found that 35% of adults over age 45 were lonely in a survey of 3,012 respondents. Those who were lonely were less likely to be involved in social activities and organizations, such as church groups and volunteering.
“The people who have success feel busier now than when they were working. They’re involving themselves, they’re wondering about their legacy so they’re volunteering, they have an attitude of personal growth and fun and experimentation. Those are the people that really succeed at retirement.”
One consideration when staying social and involved is location, and fortunately US News recently came out with its list of best places for single seniors to retire.
The world can seem unfairly slanted in favor of couples, especially to the newly single who have been half of a couple most of their adult lives. Single seniors interested in travel should investigate ways to avoid the dreaded single supplement of tour groups and cruises, and Budd also recommends volunteer trips, aka voluntourism, noting he’s seen numerous single senior women on such trips.