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3 Ways Being Single Impacts Your Retirement Planning

Maurie Backman, The Motley Fool

Planning for retirement is a good way to avoid financial struggles later in life. But retirement planning is very different for single folks than it is for those who are married. If you fall into the former camp, here are a few things you should know.

1. You won't benefit from a spouse's savings

Married couples have an advantage on the retirement savings front in that they get to pool resources once their careers end and benefit from each other's good habits. When you're single, you only have your own savings to rely on, so if you're at all behind in this regard, it's critical that you ramp up while you can.

At present, you can contribute up to $19,000 annually to a 401(k) or $6,000 to an IRA if you're under 50. If you're 50 or older, you can capitalize on a catch-up provision that raises these limits to $25,000 and $7,000, respectively. Even if you can't max out your retirement plan, adjusting your savings rate upward could make a big difference in the long run.

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Imagine you're 57 and want to retire in 10 years. Let's also assume you're sitting on $200,000 in savings and are currently contributing $400 a month to a retirement plan. If your savings generate an average annual 7% return, you'll have $460,000 by the time you retire. But if you're able to sock away $600 a month over the next 10 years instead, you'll get to retire with $493,000, assuming that same return. And that extra $33,000 could easily translate into an additional $100 per month in retirement income over a 30-year period.

2. You'll only have to consider your own needs when filing for Social Security

When you're married, it's important to consider your spouse's needs when filing for Social Security. For example, spousal and survivor benefits are based on eligible recipients' benefits, so those needing to look out for a spouse may have no choice but to delay benefits in order to increase them.

When you're single, however, you only have your personal needs to account for, so you're free to claim Social Security when it suits you. For example, if you've saved nicely in your IRA or 401(k) and want to file for benefits a little early (meaning before full retirement age), you can feel free to do so without having to worry that by reducing your benefits, you're also reducing a spouse's benefits.

Furthermore, when you're single, you can base your Social Security filing decision on your own health. Generally speaking, the better your health going into retirement, the more it pays to delay benefits and boost them in the process, since you're likely to come out with a larger payout in your lifetime. On the other hand, if your health isn't great, filing early generally makes sense. And as a single person approaching retirement, you don't have to factor a spouse's health into that decision.

3. You may have a greater need for long-term care insurance

Married seniors who retire can often fall back on each other to provide care when one gets injured or falls ill. When you're single, you may not have that same built-in caregiver, so your need for long-term care insurance is amplified.

Long-term care insurance can help defray the often-astronomical cost of assisted living or nursing home care, and it can cover in-home care if you need it. The best time to apply for a policy is during your 50s, and the good news is that if you're applying alone, you won't run the risk that a spouse's bad health will drive your premium costs up or, worse yet, put you at risk of seeing your coverage request denied.

Retiring single means getting to call your own shots throughout your golden years. Just be sure to plan appropriately so you're able to enjoy retirement the way you've always wanted to.

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