Over 50 and Single? Here’s How To Best Plan For Your Retirement

If you’re over 50 and single, you’re in good company. According to the Pew Research Center, more than one-quarter of those ages 50-64 identify as single, and that number jumps to 36% of those 65 and older.

From a financial planning perspective, it’s a lot easier to save, invest and allocate your resources when you only have to consider yourself in the equation. However, it can also be harder when you’re living on one income. With all that in mind, here’s a look at how to best plan for your retirement so that you can set yourself up and not worry financially.

Once you’re over 50, you’re actually in the best possible position to maximize your 401(k) contributions. At that age, the IRS allows you to make “catch-up” contributions of as much as $6,500. Meaning for 2022 you can put in as much as $27,000 every year to your 401(k). If you start at age 50, that means by the time you are 65 you can add as much as $405,000 to your account. Add in any employer matching contributions and your earnings and your account can potentially hit seven figures relatively quickly.

At age 50, you might be as little as 12 years away from receiving your first Social Security check — and even if you defer as long as you can, you’ll only be 20 years away. That’s close enough to start planning out your real-world Social Security distributions. Without a spouse to bank on for additional withdrawals, calculating how much you’ll need from Social Security is even more important.

If you start at age 62, you won’t have long to wait to receive your first checks, but you’ll also be taking a significant hit to your payments. If you start at age 70, for example, your checks will be about 77% more than if you start at age 62. But this doesn’t necessarily mean it’s the best choice. That’s why your 50s is the time to plan out exactly what you need from Social Security and when is the best time to start it.

You may think that an emergency fund is only important during your working career, but it’s actually even more of a requirement once you’re retired. While you still have a job, you can ask for a raise or work more hours to boost your income from time to time, but after you retire, you’ll likely be living on a fixed income. You also won’t have a spouse to help bail you out if things turn sour. If you have a financial emergency that isn’t covered by insurance, you’ll have to dip into your savings — or even worse, put debt on your credit card — to cover those costs. This can derail your entire retirement plan, so be sure to prioritize building and maintaining an emergency fund while you are still in your 50s.

One of the harsh realities of life is that as you get older, your healthcare costs are likely to increase — in some cases, dramatically. In your 50s, you’ll want to make sure that you’ve got solid health insurance in place at least until age 65, at which point you may qualify for Medicare. Even then, it’s important to realize that Medicare Part A, which is free for qualifying seniors, doesn’t cover everything. You may have to pay for Medicare Part B or even have supplemental private insurance to cover all your healthcare costs. It’s important that you look into your options and coverages before you reach this point, so your 50s is a good time to start.

In addition to standard health insurance, you should consider picking up long-term care insurance as well. According to the U.S. Department of Health and Human Services, nearly 70% of retirees will require long-term care at some point, and many Americans overlook this coverage. As long-term care can be expensive, it’s important to obtain some type of coverage. This is particularly true if you are single and can’t rely on insurance from a partner. But you’ll want to work with an insurance specialist to make sure that you don’t overpay for long-term care that you may never need. As there’s no one right answer for every person, it pays to review your options while you’re still relatively young in your 50s.

Even if you feel you don’t have a significant amount of assets, it’s important to draft an estate plan while you’re still in your 50s. No matter how much money you have, you’ll want to specify who receives what in the event of your passing. This can not only keep your affairs out of the public eye during a probate hearing but also can prevent in-fighting among your relatives and/or children after you die. You may also have particular bequests you want to make to specific people, such as leaving your car to your best friend or your artwork to your favorite niece who is an art student. If you have an ex-spouse, you also might want to specifically disinherit them in your estate planning documents — or the opposite. Whatever the specifics of your personal financial situation, it’s always best to get your financial affairs in order ahead of time to make things easier on those who follow.

While you can be single for any number of reasons, many of those in their 50s have an ex-spouse. If you are indeed divorced, make sure that you understand all of the financial implications of your divorce decree. In addition to potential alimony, your ex-spouse may have rights to a portion of your retirement accounts as well. When you’re mapping out your retirement distribution strategy, it’s important to factor in any of your legal financial obligations to any ex-spouses as well.

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