Planning for your Retirement on a Single Income

Updated on June 15, 2015

By Kirk Jewell
Founder and President of Global Financial Services

Retirement can seem like a daunting idea and one that often gets put to the back burner. With the day-to-day activities of successful single parents there is little time to even think about retirement yet alone proactively plan one’ s retirement income. When I ask my clients “ when do you want to retire”? With the exception of the obvious answer…now!!! Most single people I meet with have barely even thought about it and look at me to say” you’re kidding, right”?

Today’s environment is different than 20 or 30 years ago. Defined Benefit Pension plans are just about gone, employee health care costs have sky-rocketed, and todays single income wage earner has to fund 100% of her retirement through their 401k contributions. Lets add college funding into the equation and our failing Social Security System and its no wonder why many people just put it off.

The numbers will be increasing for retired singles in the years to come. According to demographers at Bowling Green University about one third of adults aged 46 through 64 were divorced, separated, or had never been married in 2010, compared with 13% in 1970.

There are also additional challenges that single people face when achieving a secure retirement. Living expenses are higher as a proportion of income. They have to foot the bill for 100% of the mortgage, car payments, health care, and funding retirement. They also don’t receive as many tax breaks as a joint filing couple.

How can single people beat these challenges? Integrate these following steps into your financial life and you will be on your way to a secure retirement.

Start a Plan (NOW)

The financial plan can be a bit tiresome and maybe a tad cliché. But According to the CFP Board survey, 52% of those with a plan feel “very confident” about managing money, savings and investments, while just 30% of those without do. 

That’s dramatic! Those with a plan are also more likely to say they are living comfortably.

Financial Plans are not just for the wealthy anymore and should be started as soon as possible.  Visit the CFP® boards website to get more information.

Start Saving (NOW)

I know this sounds simple but many people continue to put this off by overcomplicating the issue. The sooner you start putting money away the better. If your employer offers a match take full advantage of the free money then look to other options outside of the 401k plan to invest your money. But just start. It has been my experience working with so many people over the years that the two hardest things they had to do in their financial life was to invest that first dollar and then once they accumulated that wealth was to start spending what they have saved. As you continue to save you will develop more confidence in what you are doing and be able to slightly increase your contributions each year.

Add a Guaranteed Source of Income

As you get closer to retirement you need to be more conservative with your investment approach and include a guaranteed source of income such as an annuity. With the Defined Benefit Plans going by the wayside, an annuity can provide you with a guaranteed income you can never outlive.  One of the most common mistakes I see retiree’s continually make is leaving too much of their money at risk in the stock and bond market. Once you quit working it is very hard for you to ever get those losses back due to negative markets. This is your life savings that you have worked hard to accumulate and now is the time to protect a portion of it. Utilizing the many different annuities available in today’s market place can help protect your life savings.

If you remember these three tips you will find yourself ahead of most and you will have at least started addressing the challenge of planning for retirement on a single income.

Kirk Jewell, CFP®

Global Financial Services

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