Before my wife reads that headline and thinks that I’m up to something that I shouldn’t be, I need to explain.  If you are single, you have a different set of financial planning issues to deal with.
 

And you are not alone (pun intended!).  All of us are familiar with the game-changing demographics of the Baby Boomers.  But, a subgroup of that demographic, what some have called the “Singles Surge,” is starting to attract a lot of attention.  The latest numbers from the Census Bureau show that both the divorce rate and the number of people who have never been married have increased dramatically.  Singles in the 55 to 64 year old age group increased from 30% to 33% over the last decade.  And those in the 50-54 age group have increased from 29% to 35%.

So, what does that mean?  From a financial planning perspective, it can mean a lot.  While singles and married couples have many of the same financial needs, there are some noticeable differences.

First, let’s look at saving and investing.  Since there is only one paycheck, singles have to save and invest more.  And that can be quite a challenge.  But, in order to prepare for short-term emergencies and longer-term goals, like retirement, it has to be done.

And speaking of retirement, there are unique issues to deal with here too.  A single person will only have one Social Security check at retirement age instead of two, so building a retirement nest egg is a key.  Deciding when to start taking Social Security is actually a little easier for a single person.  If you need the cash flow, you can start it whenever you need to after age 62.  If you are still working and don’t need the income, you can wait to start taking Social Security, which will increase the size of the check you ultimately receive.

Do you have a pension?  It’s actually a little easier for a single person here too.  Married couples with a pension will often take a reduced payout from the pension in order to make sure that the surviving spouse receives a benefit after one passes away.  A single person can just choose the highest possible payout.

Disability insurance is especially important for singles.  I believe it is important for married couples too, but even more so for singles.  If a single person is injured or has a disabling illness, there isn’t another paycheck to rely on. 

What about long-term care insurance?  It might not be as important for a single as for a married couple.  Why?  If one spouse develops a need for long-term care, the couple will face the increased expense of the care.  But with the healthy spouse still living at home, they are not reducing other expenses.  For a single, the house could be sold to help fund the long-term care expenses.

This doesn’t mean that long-term care insurance isn’t an important consideration for singles.  Many singles are renters, so the above example doesn’t work.  And, even if they do own a home, most people want to stay in their home for as long as possible, so long-term care insurance can help. 

Let’s look at estate planning.  Everyone needs to pay close attention to their estate plans, but especially singles.  And, for the estate planning discussion, I’m going to include same-sex couples because of the special legal challenges they face.  It’s been said that everyone has an estate plan...that if you haven’t taken the steps to put one in place, the state has one for you…and you may not like it.  You need a plan in place that addresses the possibility that you become incapacitated.  Who will manage your assets and make decisions about your health care in the event that you can’t?  And who will handle things after you pass?  Wills, living trusts, living wills, health care directives and powers of attorney are the tools to plan for these issues.