Approaching retirement on your own is overwhelming. It’s hard to know where you stand, or the direction to take. But with a clear path forward, you’ll find your footing, and start making meaningful progress.
Below, you’ll see 5 questions to ask yourself as a single woman approaching retirement. They’ll focus your attention on the biggest hurdles and you can start overcoming them.
How Much Money Does A Single Woman Need to Retire?
This is the quintessential question for retirement success. But its answer changes depending on your situation. That said, the list of variables below always comes into play when ballparking your magic number:
Life Expectancy: Average life expectancy for U.S. women is about 80 years old.1 But also take your personal health history (and your family’s) into account when estimating the potential longevity of your lifespan.
Work-Life Expectancy: The average woman in the U.S. retires around age 62.2 That means the average nest egg needs to cover almost two decades of time! Retiring earlier or later can dramatically impact the amount of savings you need. And you’ll want to consider if you’re open to part-time hours in the future
Desired Lifestyle: Is retirement taking place on a tropical island? Or is it embracing the life of a minimalist? There’s no wrong answer! You just need to be honest about the lifestyle you’re looking to maintain in retirement. Otherwise, you’ll run the risk of underpreparing.
Proper Tax Planning: Tax planning seeks to identify future tax liabilities and build strategies to lower your lifetime tax bill. By spotting them in advance, you can put yourself in a stronger position to build and preserve your magic number. Working with a financial planning professional keeps more of your retirement savings going where you see fit rather than the government.
Investment Management: Your retirement needs to be protected against inflation, market risks, and investment mistakes triggered by fear (or greed) that everyone is susceptible to. Working with a professional can help you with all of this by aligning your portfolio with your retirement’s needs and goals.
Where’s The Best Place For A Single Woman to Live?
Where you live in retirement matters. Not only from a cost standpoint, but also from an emotional one. To keep retirement affordable and adventurous, consider the following points to find the places you’ll thrive:
Proximity to Family and Friends: Having an established network of family and friends nearby can enrich the quality of your retirement. But a fresh start somewhere else opens the door for new faces and places to enter your life. Take the time to reflect on what you’ll value from a social standpoint in retirement.
Remaining In Your Home: Your current residence may be your ideal retirement spot. If that’s the case, consider how much you have left on your mortgage, how you’d like to pay it off, and if you’d be open to renting it out for future income.
Traveling/Moving Abroad: Moving to another country can drastically reduce (or increase) your living expenses. But even if you’re just planning to travel, you’ll still want to consider the locations, durations, and frequencies of the trips you’re looking to take.
How Are You Preparing For Long-Term Healthcare Needs?
Your health needs will change as you get older. Preparing for their potential impact ahead of time puts you in a better position to stay secure in retirement. Below, are the major long-term costs to start thinking on:
Long-Term Care Insurance: The need for this will vary on a case-by-case basis. But with long-term care insurance in place, you’ll be in a better position to help cover the costs of
assisted-living services should you need them. Nevertheless, it’s worth researching the costs of assisted living facilities and in-home care providers as well as how they could be covered.
Disability Insurance: This needs to be part of your retirement plan. It’s what provides you with an income should you no longer be able to generate one yourself. Generally speaking, it’s a lower cost insurance, and if you can fund it with after-tax dollars, you’ll have more coming in when you need it most.
Health Insurance (Before Medicare): Health insurance is expensive! But are all the costs necessary? It may be time to re-evaluate your individual health plan to see if you can change coverage, find savings, and put the difference towards your retirement.
Medicare: Once you’re 65, you’ll be eligible for Medicare. By working with the right financial professional, you can have help navigating your enrollment, benefit selection, supplemental coverage (i.e. Medigap), and cost analysis of premiums and out-of-pocket expenses.
What’s The Best Way To Approach Social Security?
Your social security income needs a strategy behind it. You’ll want to know how much you can bank on, when you should apply, and how your benefits will be taxed:
Knowing How Much You’ll Receive: What you’ll receive in Social Security payments will depend on when you were born and your earnings history. You can view your Social Security statement at SSA.gov, or you can get a rough estimate using the Social Security Quick Calculator.
Knowing When To Apply: You can apply for Social Security benefits starting at age 62. But it may be better to wait. Full retirement age (FRA) is reached between age 66 or 67 depending on when you were born. And your benefit amount rises by 8% each year from your FRA to age 70. Conversely, benefits decrease by 8% each year if they’re taken before your FRA. Weighing your age, current income and other factors are important elements in knowing when to start taking your benefits.
Knowing How Your Benefits Are Taxed: Social Security benefits are taxed based on your “combined income” (i.e. adjusted gross income + nontaxable interest + half of your Social Security benefits) and filing status. By working with a financial professional you can strategize
ways to minimize the taxes on your benefits (ex: leveraging tax-advantaged retirement plans), and avoid other potential income penalties.
What Legacy Do You Want To Leave Behind?
One of the most exciting parts of retirement comes in the form of giving. Review the following ways you can protect and support those you believe in:
Life Insurance: Until your savings reach a certain point, life insurance may be necessary to protect your loved ones. Don’t wait to assess your needs. Premiums are impacted by factors like your present age and health.
Wills and Power of Attorney: If you don’t have essential estate planning documents in place, it’s time to take action. The right will and power(s) of attorney provide the needed instructions for what’s to be done with your assets in the event of your passing, illness, or incapacitation.
Trusts: You’ve worked hard to build your wealth. So when it comes time to pass it on to those next in line, you’ll want the right tools in place. Vehicles such as revocable and irrevocable trusts, ILITs, grantor retained annuity trusts, and generation skipping trusts (to name a few) can allow you to move the value of your estate in a tax-efficient manner.
Educational Tools: If you’re looking to support a loved one’s education, there’s tax-friendly ways to do so. Both 529 accounts and direct tuition payments allow you to support loved ones in a tax-friendly way.
Charitable Giving Strategies: Supporting a non-profit (or multiple) is a noble venture. And tools such as qualified charitable distributions, donor-advised funds, and charitable remainder trusts can help you make a bigger impact. Working with a financial professional helps you determine the best course of action for charitable giving and all of the other points above.
How Snowpine Wealth Help Keeps You Secure
At Snowpine Wealth, we help single women find clarity in retirement. Ryan Smith is a CFP® Professional who’s helped clients in the Utah area, and virtually all over the country answer the above questions for well over 12 years.
With your financial thinking partner in your corner, you’ll know how well you’re tracking for retirement. You’ll have someone to help figure out the numbers behind your retirement’s longevity, lifestyle, and aspirations. And you’ll have someone tailoring an investment portfolio to help reach them.
If you’re ready to take a deeper dive into the questions above, please don’t hesitate to reach out. We’re here to help you gain clarity on where you’re looking to go, and what it will take to get you there. Give us a call at 801-534-4463, or book your complimentary consultation call.
Securities and advisory services offered through Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Advisor. Fixed insurance products and services not offered through Commonwealth Financial Network®.