"Get Your Finances Ready for Retirement"-Living Single
Monday, March 02, 2009SUSIE GHARIB: When it comes to retirement, being part of a couple has its benefits. If something happens to one person, the other's there to help. But that's not always true for single and divorced people financing retirement on their own. As we continue our series, "Get Your Finances Ready for Retirement," Connie Hicks looks at the special needs of singles.
CONNIE HICKS, NIGHTLY BUSINESS REPORT CORRESPONDENT: Fifty eight- year-old Chie Hoban has been divorced for many years and is used to living on her own. Hoban, a CPA, decided to start playing the piano as a way to keep herself sharp. What worries her most about being single and retired isn't her health, but her mind.
CHIE HOBAN, C.P.A.: There are medications that will take care of most of the physical problems, but mentally, am I sharp enough to really realize what to do, sharp enough not to make a mistake with investments, so on.
HICKS: But Gerry Wheeler has a different view. After a long marriage, her divorce left her scrambling for medical coverage, just as she was getting ready to retire and before she qualified for Medicare.
GERRY WHEELER, RETIREE: And I didn't have any and I didn't know would take place after that.
HICKS: And how did that resolve itself?
WHEELER: Well, after that, I do go on his insurance for 36 months and then I was still working so I got insurance at my work.
HICKS: Wheeler, who now spends much of her time caring for her grandson, will soon have to find other medical insurance. But because she has few debts and can rely on her ex-husband's pension, her retirement finances should be adequate. And experts say people who have never been married should also make sure they're adequately prepared. Julia Andres is single and a banker in New York City. She enlisted Metlife financial planner Dwight Raiford to help her plan for retirement. And she says money is just one component.
JULIA ANDRES, BANKER: Dwight immediately got me, connected me with a very lawyer who was able to help me do my planning, my trusts, my wills, all of those pieces that were missing that I had not thought about.
HICKS: Those details are especially important for singles, who can't count on a spouse to manage their financial affairs if they're incapacitated. So Catherine Collinson of the TransAmerica Center for Retirement Studies says a single retiree should designate a backup person.
CATHERINE COLLINSON, PRES., TRANSAMERICA CTR. FOR RETIREMENT STUDIES: Somebody that they trust implicitly, who knows what their situation is, knows their wishes and has the legal authority to act on their behalf in the event that they can't.
HICKS: And financial planner Scott Barker says it's important to choose that back-up person with care.
SCOTT BARKER, CFP, RAYMOND JAMES & ASSOC.: It could be a friend. It could be a family member. You have to look to make sure that friend of the family, number one, will be willing to do it and two, has the capabilities to go ahead and manage money and also hire attorneys and CPAs.
HICKS: While much financial planning advice applies to both singles and couples, experts say the following pointers may be even more important if you're going to retire on a single income. Work as long as possible; begin collecting Social Security as late as possible; save and reduce expenses as much as possible; designate a back-up person for your finances and an executor for your estate; and be sure to have the right insurance. That includes a disability policy if you're still working, a Medigap policy if you're 65 or older and in some cases, long-term care insurance. The bottom line, if you're going into retirement as a single person, the financial burden is on you alone and that makes planning essential. Connie Hicks, NIGHTLY BUSINESS REPORT.
