According to Bloomberg, nearly 19% of people who were 65 years old or older were working either full- or part-time as of 2017, and around 20% of them said they’ll never be able to retire.
You'll need a hefty savings in order to support your lifestyle, take care of any health issues that may arise and possibly cover assisted living costs if you need it some day. After all, almost 70% of people who reach age 65 will need long-term care at some point in their lives and, according to Genworth Financial Inc., the median cost of an assisted living facility was $4,000 per month as of 2018 (and, according to AARP, it was more than twice that cost for a private room in a nursing home in 2018).
"If a single retiree needs long-term assistance with activities of daily living, he or she will likely have to hire ongoing help or pay to move in to a long-term care facility; on the other hand, when couples retire and one of them needs long-term assistance, the other person is usually the assistance provider," says Andy Panko, owner and financial planner at Tenon Financial LLC.
It's also worth noting that medicare only covers 100 days of care at a nursing facility — and that's only if your care was preceded by a hospital stay of three days or longer.
With that all said, here are some tips for saving for retirement as a single person, so that you can do your best to put enough money in the bank.
How much do you need to retire as a single person? The answer depends largely on your lifestyle, needs, health and income/feasibility of saving.
For comparison, you're probably wondering how much a couple typically saves. How much does a couple need to retire at 60? Well, according to thestreet.com, an average couple in the 56-to-61 age range without any retirement accounts had just about $17,000 in savings in 2019. Of course, that's not nearly enough for most of us to survive a year, let alone for two people to survive an entire retirement period. That's why most couples open retirement savings and have a mean retirement savings from 32 to 61 years old of $95,776, according to the Economic Policy Institute.
"Unfortunately, there is no universal answer to how much money is needed for retirement," says Panko. "It’s determined by a few things such as what your anticipated expenses will be in retirement and what other sources of income you’re going to have, such as Social Security. If you don’t already have enough sources of income to cover your expenses, then you need to rely on your nest egg to make up the difference."
Pank recommends using the “4% Rule” to estimate how big of a nest egg you’ll need.
"The 4% Rule essentially says a retiree can withdraw 4% per year of his or her nest egg and expect to statistically not run out of money during retirement," he explains. "For example, if you’ll need to withdraw $40,000 a year in retirement, you’ll want a nest egg of approximately $1,000,000 since $40,000 is 4% of $1,000,000."
However, it’s important to keep in mind that the 4% Rule is just a rule of thumb — there are a lot of unknown variables that go in to it.
"For example, it assumes the nest egg is invested in approximately 60% stocks and 40% bonds, and further assumes stocks and bonds will on average perform as they have in the past," he says. "It also assumes the retiree will live approximately 30 years. It further assumes the retiree won’t make any large additional one-time withdrawals from their savings."
"I am single and just retired in May 2019 — I did not call my retirement a retirement; I called it a graduation," says Emily Harman, who worked for the Navy since 1981 as a Midshipman at the Naval Academy, Naval Officer and Federal civilian employee. She now hosts the Onward Podcast and works as a personal coach and small business consultant. "My best tip for retiring as a single person: Downsize so you can live within your budget. The typical rule that you need 80% of your income doesn't apply to everyone."
Social security is important. What percent of retirees live on Social Security alone? Almost nine out of 10 Americans who are 65 years old and older currently receive Social Security, and the Social Security Administration (SSA) estimates that 21% of retired married couples and 45% of retired single seniors rely on it for a whopping 90% or more of their income.
So, when should a single person take Social Security? While it differs for everyone, you may want to wait until you're older than 65 years old.
"Establish a relationship with a financial planner and let her/him help you decide the optimum age to retire and the optimum age to take social security — but, in general, I encourage people to wait as long as possible (age 70) to take social security if they are healthy and still working," says Sara Zeff Geber, PhD, author of Essential Retirement Planning for Solo Agers.
Why wait to take out social security?
"If you can postpone social security until around age 70, you'll be better off," says Chane Steiner, CEO of Crediful. "You'll end up with an 8% increase in benefits and, since you'll likely live longer, you need to stretch your finances so you can live comfortably."
"The longer you wait to start Social Security, the larger the payment amount will be… for life!"Panko says. "For example, the payment you’d get by waiting to start benefits at age 70 is approximately 75% higher than the payment you’d get if you started benefits at age 62. Social Security also has an inflation increase feature whereby payments increase each year there is inflation."
There are other benefits of waiting to take out Social Secuity, too — like the possibility of more affordable health insurance, which can make surviving retirement much easier.
"Do basic estate planning," Geber says. "Make a will, create a power-of-attorney, draw up an advance directive. These will be important documents as you move on in life."
Having a plan is hugely important, especially for single people.
"If a single person becomes incapacitated and cannot make his or her own legal or medical decisions, there may not be anyone to make those decisions for them," Panko adds. "With a retired couple, they each usually make those decisions on behalf of the other person. Therefore, single retirees should carefully select people they trust to act on their behalf in situations like this. Estate planning attorneys can help put in place legal powers of attorney and/or medical powers of attorney."
It's important to have a plan for your life, but it's also important to have a Plan B in case of emergencies.
"Everyone should have an emergency fund, but where couples can look at three to six months worth of backup expenses, a single person needs to think bigger," Steiner says. "Without a secondary income to balance out losing the first, you may struggle for longer and with a bigger impact. Plan for a year if possible."
So what does that really mean? About 15%.