More and more middle-aged Americans are living alone these days. During the past 10 years, the percentage of the never-married, divorced , or widowed has grown from 29% to 35% among those aged 50 to 54 – while increasing 30% to 33% for people between 55 and 65.
These singletons have financial planning needs distinct from those of their married counterparts. Because single people have only one source of income, they'll find it harder to set aside long-term savings for financial emergencies and their "golden years" nest egg – not to mention their depending on far smaller Social Security retirement benefits than those available to two-income couples. The decision on when to begin taking these benefits depends on the financial situation of the individual. For example, singletons with an immediate need for income might opt for retiring early, while others would prefer to work as long as possible so they can enjoy larger Social Security checks after retirement (This choice would probably benefit public sector employees, whose pension benefits are calculated based on their final three years of earnings).
Disability can limit or eliminate a single person's ability to earn, leaving them unable to rely on income from a partner or spouse – which means that the individual will need Disability Income coverage. What's more, because singletons don't have spouses or children to help meet their needs for medical care in cases of illness or injury, it makes sense for them to purchase a comprehensive Long-Term Care (LTC) policy in advance.
Other financial needs for singles include:
- A revocable living trust to provide income in case of incapacity; funds outside the trust might require obtaining a durable power of attorney from whoever controls these assets.
- Joint accounts can help meet the financial obligations of the caregiver in case of legal action (However, this might create legal problems in some situations).
- Advance planning for choosing a person to act as executor of the singleton's will and making health care decisions if they're incapacitated (including arrangements for a living will, organ donation, and control of medical records).
People who are recently divorced or widowed face serious emotional stress – which means they'll need the peace of mind of a financial plan crafted by a professional to fit their changing
life situation and needs as single people.