Singles must plan carefully for retirement, because they do not typically have another income-earner in the family who can help out.
Here Are 5 Retirement Savings Tips For Singles
- Complete Your Estate Plan. Even if you do not have a family to inherit your assets, completing your estate plan is critically important. Your estate plan includes advance directive documents where you set up agents to make your medical decisions, take care of your finances, and take care of your legal affairs should illness render you unable to help yourself.
- Set Up An Emergency Reserve Fund. Married families typically include an additional breadwinner to fall back on financially in case of emergencies, but a single adult typically does not have such a backup. You should keep at least 6 months normal household expenses reserved in a liquid savings account. You can start with 1 month’s reserve savings at first, then build up to six months as your savings habits improve.
- Build Up Your Credit Score. A single adult typically faces more difficulty purchasing large-ticket items like a home or a car on credit than a married person who may have more income streams to rely on. So it is important to build up your credit score.Credit rating agencies like Equifax typically sell FICO (Fair Issac Corporation) and other monitoring products which can help you learn to improve your credit scores. To improve your score, reduce your credit card accounts to no more than 5, keep your credit card balances as low as possible, pay your bills on time, and try to keep your overall debt as low as possible.
- Purchase Disability Insurance. If you are single, particularly if you have no children or do not plan to have children, becoming disabled or acquiring serious long term health problems in your later years can decimate you financially. You need to make up for your lack of a family safety net should you become seriously ill.It is easier to acquire essential disability insurance or long-term care insurance while you are young and healthy. Talk to a trusted insurance provider about finding a disability insurance policy to meet your needs.
- Continually Save For Retirement. Particularly because as a single you have no other financial backup, start early and give as much as you can afford every paycheck to your 401(k), IRA, or other retirement savings account.
SOURCE: Grant Webster, Saving for Retirement Tips for Singles, USA Today (December 26, 2015), http://www.usatoday.com/story/money/personalfinance/2015/12/26/adviceiq-retirement-tips/77853804/