5 Essentials Boomers Need for a Comfortable Solo Retirement
Written by
Lydia Kibet
Edited by
Zuri Anderson
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Retirement looks different when you’re on your own. Without a spouse or partner to share expenses or provide financial support, planning becomes even more important. For boomers heading into solo retirement, it’s not about how much you’ve saved. Having the right plan in place to ensure that you retire comfortably is crucial.
Whether you’re planning ahead or already retired, financial experts share five essentials boomers need for a comfortable solo retirement.
Retirement Income Plan
You can’t afford to wing it when it comes to income as a solo retiree. You need a plan that adapts to market conditions while ensuring you never run out of money.
“When you are single, there’s no one else to fall back on if money gets tight. That makes having a clear plan for Social Security, pensions and retirement accounts even more important,” said Tyler Meyer, founder of Retire to Abundance. “I often recommend using retirement income guardrails so you know when it is safe to spend more and when to ease back.”
A good income plan starts with understanding timing. Should you claim Social Security at 62 or 67, or wait until 70? Beyond Social Security, think carefully about which accounts to tap first. Seek the help of a financial planner to help you map out a retirement income plan.
Emergency Fund Beyond Retirement Accounts
Most retirees make a big mistake that can derail their long-term financial security: Treating their retirement accounts as their emergency fund.
“You can have a lot of money saved in your retirement account, but what happens if something unexpected comes up, like a car repair or medical bills? This will make you withdraw from your retirement accounts,” said Devin Miller, CEO and co-founder at SecureSave. “Doing this often can destroy your long-term savings faster than you think.”
Having even a small emergency fund provides a cushion for these kinds of surprises. It doesn’t need to be tens of thousands of dollars, just enough to cover unexpected expenses life throws your way.
“Retirees should consider having a separate emergency fund set aside, just $500 to $1000. This can cover those smaller but stressful surprises,” Miller noted.
Strategic Tax Plan
Your retirement tax strategy can make or break your financial comfort in your golden years. Without a spouse’s income to balance withdrawals against, every tax decision you make can cost you more than necessary over the course of retirement.
“In retirement, it’s key to have a tax plan. You need to have a plan for which money to access, and when, to lower your total tax bill across the remainder of your life,” said Jay Zigmont, founder of Childfree Trust.
It’s important to understand the tax implications of different account types (traditional IRAs, Roth IRAs and taxable accounts) and create a withdrawal sequence that minimizes your lifetime tax burden.
“Work with a [certified public accountant] or [certified financial planner] professional to create a tax plan specific to you, Zigmont concluded.
Healthcare and Long-Term Care Coverage
Healthcare is one of the biggest financial risks in retirement, and it’s especially critical for solo retirees. Without a spouse to share costs or caregiving responsibilities, the entire burden of medical and long-term care often falls on one person.
“Before retiring, you need a plan for long-term care. With the recent cuts to Medicaid, it has become more critical than ever for you to have a plan for long-term care,” added Zigmont. “Your long-term care plan can be to self-fund or to put in place a long-term care insurance policy, but the money must be set aside solely for long-term care.”
Legal Documents
When you’re retiring solo, proper legal documentation is important to protect your interests and ensure your wishes are followed.
“If you are retiring alone, you will want to have powers of attorney, healthcare directives and a clear estate plan in place. Without these, decisions can be left to the courts, and that is rarely the outcome people want,” said Meyer.
The most common legal documents to have are the financial power of attorney, healthcare power of attorney and a comprehensive estate plan that clearly outlines your wishes for asset distribution.
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