Planning for Retirement as a Single Person

Robin Zenger, 67, wants to remain in her home in Tucson as long as possible. But she is also considering sharing a home with friends.

Robin Zenger has saved diligently and lived within her means for her entire life. When she was in her forties, she began taking a serious look at her finances to set herself up for a secure retirement. That’s a smart strategy for anyone, but it’s particularly important for people like Zenger, who is single and has no children.  

Aging presents uncertainties for everyone, but single, childless seniors are missing the backup that many people take for granted: a spouse or adult children who can step in when needed. Many of the usual basics of saving, investing and long-term financial planning apply to those aging without a life partner or adult children, but they also need special strategies for retirement saving, health care and estate planning.

Because of declining birth and marriage rates, caregiving family members will likely be in shorter supply for baby boomers and the generations that follow than in the past. Today, about half of American adults are married, a dramatic decrease from the 72% of adults who were married in 1960. In 2016, roughly 9% of those who were 50 or older had never married, according to the U.S. Census. And about one-third of baby boomers don’t have children. Still others will age alone for other reasons, including the death of a spouse, divorce, or children who are estranged or unable to help.

“Coming of age in the ’70s, I saw a lot of independent women and was keenly aware that I needed to be able to provide for myself,” says Zenger, 67, who is an adjunct history professor at the University of Arizona. Although she’s mostly optimistic about the years ahead, Zenger is still figuring out how she’ll navigate them without a built-in support system. Her strategy for this mammoth task? Live modestly, continue to work, invest, take good care of her health—and check in periodically with a financial adviser to make sure she’s still on track. She is also considering her options for housing if she can no longer live alone. 

Build a team

For many people, the reality of aging alone becomes clear as they care for their parents and wonder who will be there to help them when they need it, says Joy Loverde, author of Who Will Take Care of Me When I’m Old?. Growing older without a significant other or adult kids means you’ll need to build a cast of supporting characters—including extended family, trusted friends and paid professionals—who can help with your finances, make medical decisions if you’re incapacitated and prevent you from becoming isolated as you age.

In addition to finding people who will manage your financial and medical affairs, you’ll probably need people to stop by, run errands or drive you to appointments. Many solo seniors branch out on the family tree, tapping siblings, nieces, nephews or cousins, while others add close friends to the mix. Zenger plans to rely on a longtime friend she has known since the two attended high school together in Panama. “She lives nearby and knows what I would do in various situations,” Zenger says.

Take the time to have a frank conversation with each of the people on your list, says Michael Branham, a certified financial planner at The Planning Center, in Moline, Ill. Find out what they’re willing to do, and outline your relevant plans or wishes. Revisit these plans often—particularly if you’re relying on siblings or friends who have their own health issues, or on younger family members who may move out of the area.

You’ll also need some professionals in your corner, particularly as you grow older. Start by finding a certified financial planner who can take a comprehensive approach, assess your finances, act as a sounding board and help you assemble and direct a team of other professionals. You can find advisers with the CFP credential at letsmakeaplan.org, or find a fee-only adviser at napfa.org. To find an adviser who has no asset or income minimum, visit Garrett Planning Network. For more help finding and vetting a financial planner, see kiplinger.com/links/advice.

To fill out your team, enlist the help of an estate-planning or elder-law attorney and perhaps a certified public accountant or enrolled agent to help with tax planning. A geriatric care manager can help with Medicare paperwork, monitor your medications and help you find a home health care aide or evaluate long-term-care facilities. If you don’t have a friend or family member in place to carry out your wishes and make legal, financial and health care decisions for you, consider working with a professional fiduciary, such as an accountant, lawyer or trust company officer.

Create an income safety net

If you’ve never had a partner or have been flying solo for years, you’re accustomed to living on one income. But many singles don’t have a strong enough backup plan to cover the costs of a major illness or other calamity.

Start by making sure you have enough cash on hand to cover emergencies, from a furnace that quits in the dead of winter to a job loss. While couples can generally aim to keep three to six months of living expenses in an emergency fund, many financial planners suggest that singles aim for a larger cushion, stashing between nine and 12 months of living expenses in a savings account. As you approach retirement, consider bulking up the account with at least two years of living expenses so that in the event of a market downturn, you won’t have to sell investments at a loss to pay the bills.

For singles who are still working, disability insurance is also more important than it is for those who are part of a couple, says Allison Alexander, a CFP with Savant Capital Management in Rockford, Ill. Many people have disability coverage through work, with premiums paid or heavily subsidized by their employer. That’s a start, but it’s rarely enough to meet your needs if an accident or illness keeps you from working. And if you’re out of work for a long period, you could end up depleting your retirement savings to cover living expenses.

Sponsor of the SPOTLIGHT Senior Services & Living Options
Resource Guide

 http://www.spotlightseniorservicestucson.com

Visit us today and say "I saw you in SPOTLIGHT!"  

Visit www.NovaReverse.com 

This Growing Problem for Seniors Threatens to Delay Retirement

Americans today are more likely to reach retirement in debt than ever before.

That's the takeaway from a new study that appeared last month in the American Economic Association Papers and Proceedings.

The researchers compared debt levels among different generations when they were between the ages of 56 and 61 to learn how the financial standing of people bracing to exit the workforce has changed over time, and how much the Great Recession is to blame.

(The average American retires in his or her early 60s).

Researchers found that more than 70 percent of people who fell in that age range in 2010 were in debt, up from 64 percent in 1992.

"You're giving credit to people who don't know a lot about, for example, the power of interest compounding. "-Annamaria Lusardi, the Denit Trust Chair of Economics and Accountancy at the George Washington University School of Business

"More and more, the current generation will have to deal with debt close, and into, retirement," said Annamaria Lusardi, the Denit Trust Chair of Economics and Accountancy at the George Washington University School of Business, and a co-author of the study.

In addition, she said, "the value they carry close to retirement has increased a lot."

People who were between the ages of 56 and 61 in 2010 carried a median debt balance of $32,700, up from $6,760 in 1992. (All values are expressed in 2015 dollars).

"This debt can contribute to some financial fragility," Lusardi said.

For one, she said people might be forced to work longer. Older families carrying debt will also be more exposed to changes in interest rates, which are expected to rise.

Having to divert a greater share of one's resources toward mortgages and credit card bills can also be especially difficult (potentially impossible) for those on a fixed-income.

And more than 40 percent of single adults receive almost all of their money from their monthly Social Security check, according to the government.

Such debt can even increase one's chance of filing for bankruptcy, Lusardi said, pointing to another study that showed bankruptcy filings growing fastest among Americans over the age of 65.

So why are older Americans deeper in arrears than they've ever been?

In part, that's due to the increase in housing costs during the 2000s.

On top of high prices, people also were able to secure homes with smaller down payments, and mortgages were increasingly available to people with lower credit scores and few resources.

And there are still scars to show for it.

The mean value of mortgage debt for people between the ages of 56 and 61 in 2010 was $73,923, compared with just $27,493 in 1992, according to Lusardi's study.

"People over time have bought larger homes with higher mortgages," Lusardi said.

3 debts to pay off before you retire  8:01 AM ET Thu, 2 Nov 2017 | 01:45

Borrowing has grown easier elsewhere too, she added.

Credit cards along with a slew of alternative financial services, like payday loans and auto title loans, are available to more people than they were decades ago, she said.

"You're giving credit to people who don't know a lot about, for example, the power of interest compounding," Lusardi said.

The lenders, for their part, might not always make the the terms explicit.

"Retirement today will have to do not just with accumulating wealth, but managing debt," Lusardi said.

Sponsor of the SPOTLIGHT Senior Services & Living Options Guide

http://www.spotlightseniorservicestucson.com

Visit us today and say "I saw you in SPOTLIGHT!"

www.novareverse.com 

If you're 64 and thinking about retiring, here's what you need to do today

If you’re around the age of 64, you almost certainly remember the heyday of the Beatles. Their 1967 song, “When I’m Sixty Four,” laments getting older, pondering, “Will you still need me, will you still feed me, when I’m sixty-four?”

Fortunately, our attitudes about aging and what is considered “old” have evolved since the '60s. Today, you’re considered relatively young at 64 — in part because so many people are living longer, more active lives.

Nearly one in four Omaha households have someone age 65 or older. That’s a 37 percent increase in the number of seniors, according to census data from a decade ago. In metro Omaha that’s about 85,000 seniors. There’s more to come: The largest number of people will turn 65 in 2025.

Most will be eligible for Medicare. Most will be surprised to discover that Medicare doesn’t provide the kind of coverage they were used to under their employer’s health plan. It can be eye-opening to find out dental, vision and hearing benefits are not part of basic Medicare.

So if you’re 64, thinking about your retirement, what should you do?

Enrolling in Medicare

Some insurance companies will start contacting you about their Medicare products a year in advance — which is good, because there is homework to do.

Answers to two basic questions will help you begin:

1. Do you need to enroll in Medicare at your 65th birthday?

2. How do you choose the right Medicare coverage and avoid penalties?

Regarding the first question: If you don’t have health insurance through your employer or another source, you may want to enroll in both Medicare Part A and Medicare Part B on your 65th birthday. If you do have employer coverage, you may want to sign up for just Part A. There’s no monthly premium.

“People get confused, thinking the deadline to enroll for Medicare is the same time as when they need to apply for Social Security,” said Dr. Debra Esser, chief medical officer, Blue Cross and Blue Shield of Nebraska. “They are different. If you were born between 1943 and 1954, retirement age for Social Security purposes is 66, but Medicare enrollment is at 65.”

In answer to the second question — how to avoid enrollment penalties — allow yourself plenty of time. Most experts advise three months before your 65th birthday. The penalties start if you don’t enroll when you’re first eligible. If you’re late enrolling for Part A you could pay a 10 percent penalty; for Part B, the penalty could go up 10 percent each year for as long as you are enrolled. In addition, Medicare Part D (prescription drug benefits), assesses a penalty based on the number of months you could have had coverage but didn’t sign up.

OK, so you’re enrolled in Medicare. But remember, Medicare doesn’t pay all your costs. You’ll need to purchase additional coverage to fill in the gaps. It’s important to pick the plan that best suits your coverage needs, budget and lifestyle. It’s also important to get advice from coverage experts, such as an agent or a broker.

“My advice: Don’t be afraid. There are many resources available and people more than willing to help you,” Esser said.

Medicare Supplement

Medicare Supplement insurance (also called Medigap) can be purchased from a private insurance company. Medicare Supplement covers what basic Medicare doesn’t, such as co-payments, deductibles and health care outside the United States. Supplements don’t cover long-term care, dental, vision, hearing and private-duty nursing.

Medicare Advantage

Medicare Advantage plans are often called Part C and are offered by private insurance companies approved by Medicare. The plans often provide benefits for routine vision, dental and hearing services and prescription drugs. If you’re thinking you want a Medicare Advantage Plan, you must be enrolled in both Medicare Parts A and B.

Bottom line: Do your homework and get expert advice. That way, when you’re 64, with some preparation, you’ll be ready to make decisions about your Medicare coverage with confidence.

Sponsor of the SPOTLIGHT Senior Services & Living Options Guide

http://www.spotlightseniorservicestucson.com

Call us today and say "I saw you in SPOTLIGHT!"

Visit us at:  http://www.novareverse.com