By Dave Carpenter
2:00 a.m. October 18, 2009
Single people get left out of the picture a lot when it comes to retirement. Typically it's smiling couples who are shown contemplating their sunset years in ads, brochures and magazines.
The big picture is about to change, however. A wave of single baby boomers is poised to alter the face of retirement, bringing a new set of planning priorities into focus.
Single people are now 96 million strong and make up 43 percent of the adult population, up from 28 percent four decades ago. Nearly half are older than 40, including 13 million who have never married. Those figures have swelled as people divorce more often, live longer or simply choose not to marry.
That means single people are commanding more attention from financial planners and companies looking to cater to their needs.
“It's still mostly couples who seek retirement planning, but more singles are starting to come forward,” says Eleanor Blayney, consumer advocate for the nonprofit Certified Financial Planner Board of Standards.
With no spouse to rely on, extra precautions are needed in order to be well-positioned for retirement. That holds especially true for women because they live longer. Three of every four single people age 65 or older are women.
Here are some retirement planning priorities that single people should focus on:
Save or pay a price. The cost of living for single retirees is about 40 percent higher than for couples, according to the American Academy of Actuaries. That's because couples can share housing and other expenses.
Still, planners say single people tend to wait longer to take retirement saving seriously. That can lead to big problems.
Roughly half of all people 55 and older have saved less than $50,000, according to the Employee Benefit Research Institute. That's an alarmingly small sum in light of rising health care costs and growing length of retirement, which now lasts 15 to 20 years on average.
The focus on savings should include building a large emergency fund since single people don't usually have a second income to fall back on when something goes wrong, as couples do, says Jean Setfand, AARP director for financial security.
Calculate retirement income. The traditional three-legged-stool approach to retirement security — employer pension, Social Security and personal savings — is a bit lopsided for single people because of their heavy reliance on Social Security.
Social Security benefits account for 90 percent of income for four of every 10 unmarried retirees and two of every 10 married couples, according to the Social Security Administration.
That underscores the added urgency for single people to carefully assess their sources of retirement income. They may want to also consider buying an annuity to provide an additional stream of income.
Go to the Social Security site (www.ssa.gov ) to estimate how much you will receive from the government at various retirement dates. It's a good idea financially to wait at least until full retirement age — 66 or 67, depending on your birth year — before starting your benefits.
Social Security checks are about 25 percent less if you retire at 62 instead of full retirement age. After full retirement age, the monthly benefit will increase by 8 percent for each year you delay.
Get disability insurance. Who's going to pay for your retirement if you have a serious accident or prolonged illness that prevents you from working?
Single people generally don't have the ready solution that married couples do. That makes long-term disability insurance all the more important so their retirement security isn't ruined by a medical issue.
Employer-paid disability insurance is required in most states. But confirm that your employer offers long-term disability coverage — not just short-term, also known as sick leave. The typical long-term disability group plan covers up to 60 percent of salary.
If your employer doesn't offer long-term coverage or if you're self-employed, strongly consider an individual plan. The cost varies widely depending on age and health but can easily approach $100 a month. It might be worth it.
Make long-term care insurance a priority. Long-term care insurance is a critical part of single people's retirement plans because there's likely no one else to take care of them. As opposed to long-term disability insurance, long-term care coverage helps pay for professional care when you can no longer perform the regular activities of daily living, such as bathing, dressing and eating.
It can run $2,000 a year or more if you wait until your 60s to get it, less if you get it earlier.
“The numbers are big, but so is the risk,” says Bryan Place, a certified financial planner in Manlius, N.Y.
About 70 percent of people older than 65 will require some type of long-term care services during their lifetime, according to the National Clearinghouse for Long-Term Care Information.
On the bright side, life insurance is an insurance you can probably forgo if you have no partner or children.
Do thorough estate planning. Single people should take extra pains to ensure that someone has the legal right to manage their assets or make medical decisions for them.
Consider meeting with an estate-planning lawyer to get the proper documentation in place. You'll need a will to state how you want your assets distributed after your death, a health care proxy and living will should you become incapacitated and unable to make medical decisions, and a durable power of attorney for finances to allow someone to handle your money matters in an emergency.
Despite the need for extra planning, the outlook for single retirees isn't bad. They can enjoy greater flexibility and financial autonomy than their married counterparts if they prepare well.
“I often tell my single retirees that retirement is their ‘me’ time, hopefully,” says Blayney, who also is president of a financial advisory service for women, Directions LLC. “They've just got to make sure they've got the resources.”