How to Plan for Single Clients in the Decade Before Retirement

On the other hand, having only one set of retirement assets and one stream of income can make financial planning more challenging. For example, single clients will have only their own 401(k)s or individual retirement accounts to tap in retirement. Clients who have never married have only their own Social Security benefit — and no partner to fill the income gap if they choose to delay their claim.

Clients who always have been single and have built up a solid earnings history and retirement savings may well be in good shape for the years ahead.

However, a client who becomes single during this stage of life may be facing reduced financial security. Divorced or widowed clients could find themselves with financial ground to make up in retirement, especially if they were not the primary breadwinner in their married years.

Review All Sources of Retirement Income

As with all clients, it is important to get a handle on single clients' potential sources of retirement income. These might include:

• Balances in retirement accounts such as a 401(k), IRA, 403(b) or a 457 plan
• Self-employed retirement accounts such as a 403(b) or solo 401(k)
• Taxable investment accounts
• Social Security
• Pensions
• Annuities
• Self-employment income
• Health savings accounts
• Employer stock compensation
• Rental properties
• Savings accounts

For clients who are employed or self-employed, saving for retirement through an employer-sponsored retirement plan like a 401(k) or a self-employed retirement plan should be a priority. For many clients, these are prime earnings years and they should maximize their plan contributions to the extent possible.

For clients who are widowed, it's important to review any retirement account assets they may have inherited from their late spouse and to incorporate those assets into an overall retirement portfolio. The year of a spouse's death is the survivor's last chance to file a joint tax return unless they remarry, and there are planning moves they may want to consider. Divorced clients may have retirement plan assets that went to them in the divorce settlement.

Manage Retirement Accounts

Nationally, there may be $2.1 trillion sitting in 31.9 million forgotten 401(k) accounts, according to recent research.

Many clients will have changed jobs once or several times during their careers. Be sure that all retirement plan accounts from prior employers are accounted for and properly invested. This might be in a 401(k) or other employer-sponsored retirement account or a rollover IRA.

For many clients in this age range, retirement accounts like 401(k)s are often their largest investment accounts. Be sure that these accounts are properly invested for the client’s age, along with other accounts such as IRAs and taxable accounts.

Social Security Planning

Clients in this age range need to understand their Social Security claiming options. For many clients, when they claim their benefit will be a function of when they plan to retire and how long they plan to work. Access to other retirement accounts, as well as to a pension if they have one, will play into when is the best age to claim their benefits.

For widowed clients, survivor's benefits are a factor to consider. Depending on the size of their own benefit and the survivor's benefit, it may be advantageous for a surviving spouse to claim one benefit first and switch to the other.

Clients who are divorced after at least 10 years of marriage may be able to claim benefits based on their former spouse’s earnings record. A number of rules are associated with this, so it's important to assess each situation to help clients determine the best claiming option.

Retirement Lifestyle Planning

At what age does your client plan to retire? Will their retirement be complete or partial? What type of lifestyle do they envision? This might include relocating, travel or participating in hobbies.

Of course, planning for a retirement lifestyle is an essential part of putting together a spending budget to support it. This planning can help clarify a client’s retirement income needs.

Long-Term Care

Planning for potential long-term care needs should be a priority for single clients in this age range. This might include working to secure long-term care insurance. The cost of staying in a nursing home or other facility can be high, and costs will likely keep rising.

Retired single clients might consider moving to a retirement community. This can be a good solution even if they are in relatively good physical and mental health into their 70s, 80s or beyond. Many of these communities have living options that address a range of health outcomes.

Without a spouse to care for them and potentially no children, single clients need to ensure that they will have access to the care they need and the funds to cover the cost when the time comes.

Estate Planning

Single clients in their 50s and 60s should be sure to have their estate planning in order. This includes a proper will, beneficiary designations on retirement accounts and any life insurance policies, plus designated medical and financial powers of attorney to make necessary decisions in the event of their incapacity.