Retirement Planning for Singles: Don't Make These Mistakes
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- čas přidán 20. 07. 2024
- Are you a single woman worried about your retirement? You're not alone. Single women face unique challenges when it comes to planning and preparing for their retirement. We will explore some common mistakes people make when approaching retirement as a single individual and share a real client case study to help you understand how to address these challenges and create a retirement plan that suits your unique needs.
Common Mistakes to Avoid ❌
Before diving into the case study, it's crucial to address some common misconceptions and mistakes that people often make when planning for retirement as a single person:
➡ Dividing Expenses in Half: While some costs may decrease when married, such as food and entertainment, others, like property taxes, utilities, and mortgage or rent, remain unchanged.
➡ Tax Implications: Single individuals have a different tax situation than married couples. The standard deduction is lower, and social security benefits are calculated differently, which can significantly impact your retirement income.
➡ Shift in Objectives: Your retirement objectives may differ when you're single. Married couples often focus on protecting both spouses throughout retirement, while singles prioritize their own lifetime and objectives.
Beth's Case Study 💭
Beth is a 63-year-old single woman who recently went through a divorce. Beth's situation sheds light on how a change in marital status can impact retirement planning.
Beth's initial plan was to stay in Southern California, travel, and visit her children and grandchildren in Tennessee. Post-divorce, her priorities shifted towards spending more time with her family.
➡️ Evaluating Beth's Resources:
Beth had approximately $1.3 million in liquid assets and $1.45 million in home equity. Her income sources included her current salary and projected Social Security benefits.
➡️ Analyzing Expenses and Goals:
Beth's desired annual retirement expenses were around $72,000, including healthcare, travel, and college savings for her grandchildren. She also wanted to budget for a new car every seven years.
Challenges and Solutions ✔️
Initially, Beth's retirement plan showed that she might run out of money by her early 80s. However, her financial advisor proposed a different approach:
Beth considered selling her California home, downsizing in Tennessee, and using the proceeds to buy a new home.This strategy increased her liquidity and reduced property taxes, state taxes, and her overall cost of living.
➡️ Adjusting Contributions: Beth redirected her Roth IRA contributions into her 401(k) to take advantage of pre-tax deductions.
➡️ Social Security Strategies: Beth explored spousal and survivor benefits based on her previous marriage, increasing her income floor.
➡️ Investment Allocation: With her reduced expenses, Beth adjusted her investment portfolio to align with her new retirement goals.
Beth's case study illustrates the importance of reassessing your retirement plan when transitioning from marriage to singlehood. By understanding your unique financial situation and objectives, you can make informed decisions that optimize your retirement lifestyle.
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please add video on retirement for single women , never married and no kids
Yes. Some of us took this happy road. My dog is my child.
@@shockwave1126same- except I have TWO dogs! Twice the happiness 😊.
While helpful to some…this scenario is for a divorced woman with children, high assets, and things that just don’t apply to the average single woman…no kids, without millions, that just wants to live a peaceful happy life in retirement. Anything for us????
There’s not much that’s different based on what was highlighted in the video.
No spousal benefit or survivor benefit to consider, just your own SS claiming strategy.
No kids means not cash to support weddings or other life events. It also means that they can’t be a part of supporting you in retirement. I.e. you’re on your own unless you could live with other family. Your LTC plan is a little more critical, but also simpler.
I'm (happily) in this club! I *almost* match Beth's assets, I live in SoCal, but my condo is not worth as much as her property. You all should read " The Power of Zero" by David McKnight, it's a quick and impactful read! He talks about a LIRP ( Life Insurance Retirement Plan). I had thought because I am single/no kids that I didn't need life insurance, but if you get the right policy it can provide a tax free income while also being an avenue to pay for long term health care. Check it out for yourself, you will not regret it!
Now do one for people with less than a net worth of $400,000 like the majority of single people.
His company doesn't work with people who have net worths that low
@@rayzerot Most likely! I went to a local CFP and the asshole just smirked at my financial print outs and claimed they couldn't help me
@@nancymoore7657that made me laugh but the same would happen to me.
“Beth” was single after a lifetime of being married. Now produce a video on truly single people - no ex-spouses, no kids, no trust funds, no big inheritance, just go-it-alone singles.
I was thrill when seeing this video’s title. I lost interest as soon as I heard her information (divorced with $1 million home). Please, do a video that is true middle class and single!
Beth starts out at age 63 worth $2.75M. This is not remotely realistic for the majority of single people, especially single women who make less than men.
Exactly. This scenario didn't help me at all. Vicki
This is SoCal where everything is at least 3x more expensive than anywhere else in the country. Not every scenario is going to be perfectly applicable to you. That said, the exact same principals still apply no matter how much you have in assets.
You're right. The number should be done using Median income because a lot of people are struggling. Starting with an almost multi-millionaire doesn't help most of us. It simply demonstrates that if one has money, one has options. Sigh...
Beth needs to beg her ex to take her back😅😅😅😅
As a 47 year old woman in Ohio, I expect to have that at retirement. This is very doable.
I work massive amounts of OT at a Hospital, the most I ever earned was $62k most were in $50k or less? These numbers are so Shockingly High for me? These people are So RICH yet acting like they are barely scraping by? My Pension And SS will only be about $40K. What about people like like US Not just Rich People?
What about your 401k? You would need an amount where uou could withdraw $10k/yr to match your current lifestyle?? Less if you have a paid off home by the time you retire
I got excited when I saw the title, but unfortunately widowed/divorced, million dollars+ in investments and another in assets isn’t anywhere near my reality as a single woman. Love your channel though and I think it’s unrealistic to expect one channel to meet all my needs.
If you can do one for singles (no benefits coming from former spouse) and less than a million in total assets that would be great!
But in the mean time for other people:
Drew Blackston (Your Financial EKG) has some great scenarios for singles in the $500-$800 total investment range.
Duane (retirearly500K) retired at 58 in 2021 with $548,000 and a mortgage (!!!) and he shares his journey (including his monthly balances) with his followers.
For those who might end up with moderate income in retirement, these are two great sites to accompany the great content James is providing us here!
Agreed.
It’s so much more expensive to live if you are single vs married, and our tax laws have no sympathy. For instance, the homeowners exemption when selling a home. If you’re single it’s only $250,000. A single person gets stuck paying capital gains for any amount over that. If you’re married, you get a $500,000 exemption from taxes. Why is that? It’s just one home!
weird to go straight to an example with kids, ex husband etc. how about a truly single for life person. no need to be gender specific. i'm guessing some differential points would be thinking more about care with no kids to rely on in old age. not sure what other things to particularly think about as a lone wolf in life.
What about single never married? We need a retirement strategy as well
Same thing he just walked through, but you just plug in your own social security amount. None of these scenarios are exactly what anyone else has, but you can still learn from them.
i know, right. Q: single folks? A: well beth has been married for most of her life..... sigh.
Not a very realistic scenario. Most women divorced in their 60's do not end up in this financial situation.
Really appreciate the ‘single’ perspective! Please keep the Single examples coming throughout your future videos. Very helpful in my planning for my upcoming retirement in four months. 👍
The biggest roadblock I’ve found as a single, and one I’m still struggling with, is the unfair distinction between singles and marrieds when it comes to the exclusion amount when you go to sell your home. Having lived in my home for a long time and living in a place that had property values raise substantially, this is a big problem. People are surprised, as was I, that rolling profits over to a new home is no longer a available to a primary homeowner. So not only would I be on the hook for massive capital gains, which could also throw my Medicare and Social Security off unless I go through an appeals process, but I won’t be able to move into a more appropriate aging in place home without taking a mortgage due to my profits having to go to Uncle Sam.
These tax law changes were very helpful for people who move more often and can claim the exemption over and over again, but totally unfair to older people who tended to stay put.
please add video on retirement for a sub-million single person, never married, no kids, and
that wasn't lucky enough to marry and then divorce with a financial golden parachute
Thank you James for addressing us single ladies! I’m 7 weeks from retirement, and am feeling fairly confident I’m going to be okay. Great coverage of the topic.
As a widower, this applies to me. I'm 60 now, but will be retiring at 61. Thanks!
I have family members that died below the poverty level owing more than their net worth. Made good money their entire careers but lived in debt and above their means so were always in trouble financially. Others made much less but lived debt free and ultimately had a better retirement because of it.
Thanks for this. Recently divorced in my 50’s and this was very useful. Thank you- please do more of these!
This was great! James, I really appreciate you making this video, and that you listen to your viewers. Thank you!
Nice job, James. I appreciate giving airtime to us single folks!
Thank you James--your videos have always been very helpful. I've learning a lot from them.
I appreciate the divorced with kids aspect of this scenario. One aspect you failed to mention, unless i missed it, was in order to draw on ex-spouse’s Social Security record, the ex-spouse needs to be of retirement age (62 or older). I married a younger man so I will now have to wait until I am 69 to draw ex-spouse benefits. Still worth it since I was a stay at home mom for most of my married life. I’d like to see a version with less assets (400K) and lower budget (36K annually). I also plan to relocate (From CO to FL) to cash out some of my equity and have a lower cost of living. Thanks for the video. -new follower
Would you consider doing a video about singles with no children? One point I would love to see is how the single is going to handle long term care costs down the road.
Another great job James! Thanks!
Life long single man, no wife, kids or pets just peaceful bliss🤗👍🏾
Excellent analysis of the woman's options! Downsizing the home and moving to another state makes the most sense for her. Too many people get attached to the "old homestead" and overlook the advantages of a move.
I'd like to see an analysis for a woman who has been single all her life, because her situation is most likely not going to be net worth in seven figures.
You're running really great channel, but this video is only useful for a tiny amount of the population. When you're starting retirement with that high amount of assets you don't need a bright young lad like you to spell it out in detail. It's easy. Get off the West Coast, live somewhere lovely, safe and cheap and conservatively and you're going to have more than enough for yourself and to leave to your grandchildren. Could you do a video for single retirees much closer to the average nest egg? No one retiring with two and a half million in assets is worried.
About 5 minutes before you said it I was thinking, "Sell the house and move to Tennessee." Seems obvious. One of the benefits of my divorce is that it gave me the freedom to relocate.
That's what they call Surviving Spouse Tax Trap. Interestingly there is no Healthcare MEDICARE Plans expenses mentioned in this video. These MEDICAL insurance in Retirement with most likely MEDICARE Advantage Plans are only covering your LOCAL doctors and hospitals in the Network and Medigap Plans costing $500+ per month and then additional other Standard MEDICARE expensive premiums. Since Beth's husband is not in great health, this plan doesn't seem to mention another thing: in California House would be protected from Medicaid should it be needed for unaffordable Long Term Care and Nursing Home, but releasing Home Equity to make it Liquid would not protect your not in great health spouse or you from Medicaid liens on LIQUID Assets. Please display a real Plan for such case when Long Term Care and Nursing Home Benefits are needed by not in great health spouse and then what happens to Surviving Spouse Actual Taxes and add Rampant Inflation as a factor for most.
Rich people will be fine. The rest of us are desperate for realistic advice. Also, when we ask for advice for a single person, we mean someone with zero possibility of getting spousal benefits.
Thank you for considering this group!!!!
Thank you for this video..how about being 57...debt free..no kids or husband $1.1 mil in assests...paid off condo in NJ want... to retire sooner...maybe looking to live in Tx...would like to work part time till maybe 62-62 1/2 to collect ss but wondering about health insurance till 65? 🤔
Interesting that people were in the mindset that things would be halved for single people. I’m taking the approach that i need to plan for same amount as a married couple, plus the additional they get in ss 😳
Why the heck would Beth wait to retire at 67? She is quite comfortable now. Sell the CA house!
I’m 67 and still working full-time. Maybe “Beth” likes working. Some of us do.
This was incredibly insightful, and I’m sure I’m not alone thinking this.
I am single no kids. My asset and savings is nowhere close Beth’s worth. However what you lay out for her, I cross check with my goals and finance. I retired early 18 months ago and proceeded to spend money buying stuff. I sobered up this year to track my spending, stop shopping, and define financial goals. I need to save for cash reserve annually for home repair, future car purchase, dental implants, and travel. The most I can save is about $20k a year. Since I have healthcare from my employer, I don’t have to buy my own. I don’t have kids so no worry about their and grandkids’ finance. I plan to withdraw my 457k savings 10 years from now for 15 years. I’d be in my 80s when I empty my 457k. However there is no way I can spend my annual withdrawal, I am saving whatever I can’t spend (after tax). If I continue to live past my 80s, I have money in the bank.
Why is the thumbnail and introduction to this video addressed to single women rather than to all singles? Even though the example was for a single woman, I did not see anything in the financial content of this video that could not apply to a single person of any gender.
Frankly, as a never-married woman with no kids I didn’t think there was much that applied to me at all. I would prefer to see something aimed at people who had neither the benefit of (temporary) double income or the kids as a primary focus. I’m not sure that there’s a point to focus on a single sex in that case.
Very much enjoy your insightful, factual videos. Unfortunately many of my friends and myself don't have "Beth's" equity. Instead, approaching retirement as renters (without home equity) and with much smaller retirement/equity account balances. Can you provide guidance for single women (and men) in our 50's anticipating $1600-$2000/mo social security, no pension, only $60,000 current investments, and limited remainder for retirement savings from current paycheck. How best can we maximize and prepare for retirement in the next 10 years?
James is a Financial Advisor who makes his money by managing money for folks with at least $1 million (or close) or more. He charges a percentage of that money each year to manage their investments.
Thank you for this video.
Thank you! Very helpful example.
Glad it was helpful!
Thank you James!
I have come to realize that there is a value to community, friends and family. I am trying to balance that with moving to a different area.
We really enjoyed this video as I am significantly older than my wife. I just wish we could work with someone to run through these scenarios with us But videos like this and help with the plans. But videos like this are really helpful.
Thanks for this. So sick of cookie cutter information only relevant to marrieds. I see a lot of requests for other scenarios. I am single and have a situation where I need something like a spendthrift trust for my one heir.
This scenario for single women retirement planning is not realistic at all and probably applies to a very small % of women.
I assume about 70-80% cost difference as a quick check. For our case I just compare the actual numbers, because why not.
Please do this again with median income.
Very useful!
What a lovely lady. Her priorities are so sweet. 😊
Hello, helpful video, thanks for that! Love the way you explain things. However in all of these senecios both you and Ari do, you neglect to input your fees. .5-1% per year of a portfolio is a significant expense. In fact could be my personal Most significant expense. More than healthcare for example or the "vacation" spending. Why is this never included? Thanks!!
James, when you run these projections, do you take into account the fees you charge when showing the likelihood of success? Granted, I wouldn't expect to see the fees are a make-or-break factor, but it's still significant, especially on a multi-million dollar portfolio.
Your Financial EKG is better suited for those women who are single and never married with no kids, no alimony, no survivor benefits, no grandchildren and with only a 401K/Roth and modest house or renting
Advice was good but the naming of this video was bad. It should have been "new" or "recent" singles. This was absolutory NOT a video for "single women" unless you have a predisposition where you believe that women still exist solely in the context of their Exs and kids. I'd like to believe that you aren't bias, but this video could be taken very much that way. I suggest renaming and changing the description. If you do see any differences that true "single women" need to plan for, that video would be a different one.
Also, there is no state income tax in Tennessee.
Yea this really doesn’t help me cz I’m single, no kids, in the upper lower class (make too much to be lower class but not enough to be middle class)with less than $150k in retirement funds
Dear James you and I have the same eyes/eye color. Not very common. Same skin/ hair color too. Bet we are related in some way 😊. Also, why are you using a financial example with a person who is in the top 5% of retirees as far as assests and savings. . This video applies to almost NO ONE on youtube 😂😂😂.
Was Beth able to continue working 2 or 4 more years from Tennessee or did she wait until she retired at age 65 or 67 to sell the CA house and move?
I just don’t see how you can have reasonable spending projections at the start of an inflationary decade. I would caution anybody that planned to go cash flow negative when you have no idea what your purchasing power will be in 8-10 years
Can you do a case study on a couple in the 30s? Am I on track for retirement in my 30s?
Since we are becoming a nation of singles- we need to stop giving more perks to married people- makes serious economic sense and built on the old school conceptions about the role of women in the marriage.
Is there a quasi-breakeven point when doing Roth conversions don't make sense? For example, my wife and I are 63 and retired. We have $372K in a traditional IRA at a national brokerage firm (with a 100% stock allocation) and guaranteed income (social security-that we claimed at 62-and three pensions that are adjusted for inflation and has survivors benefit at 50%) that covers all our expenses; including our home mortgage-with a 2.75% interest rate. We plan on withdrawing up to the standard deduction each year from our traditional IRA, rather than doing Roth Conversions.
Albeit, we have a contingency $250K term life policy with my wife as the sole beneficiary that’s earmarked to cover the cost of Roth conversions should I pass away before age 75. However, we have run the numbers and it seems like the breakeven point for doing Roth conversions for traditional IRA balances is $500K or more. At least that the case and our situation; thus, my question.
The current standard deduction is pretty high and the current tax brackets are set to expire in 2025. Many financial pros think that taxes will have to go higher at that point due to the high amount of debt the U.S. has. So, you may want to take that into account when thinking about whether it's a good idea to skip converting traditional retirement assets into Roth.
Would like to see the same video with divorced or widowed men.
I prefer the traditional plan single (mostly recently divorced women) use: They move to Florida and hunt for a rich husband as a retirement plan. Unfortunately, that animal has long gone extinct. There are no good available men in retirement towns.... Which a supply chain abundance... All kidding aside, I hope more single women listen in to this advice. In my experience they are woefully underprepared and put more thought into their daily strabuck order than they do their retirement decisions.
Couldn't she cover some of these like helping grandchildren with Life Insurance instead of monthly Contributions?
How big is Beth's house if it is $600,000. That sounds a lot of house for a single person unless she finds another partner. If the house is big, has she considered that it might be a lot harder to deal with something like that especially one that has multiple levels that may be a big hassle as she gets older? Has she considered downsizing to something more manageable like a rambler? Also downsizing would probably get rid of a lot of stuff to maintain and free her up if she is planning to travel extensively as a retiree.
you'd be lucky to get a 500sf condo in NYC for $600K
Probably depends on where in TN. May not be as big as you think depending on area. Also her kids are near to help. Some people like more space. Maybe she’ll downsize again later.
@@hagakuru Yes, but that much money in TN will get you something practically palatial. She might be downsizing in price but not in size.
Tennessee is not cheap if you want to be in an urban part. There are a lot of houses (and condos) these days $650.000 to 1.200,000 and condo fees can run $800,000. I was just discussing this with a friend because her idea of what real estate costs in Tennessee are about 40 years behind the times.
My home is $600k- it’s only an 1800 sq ft 3bd/2.5ba townhouse, i live in Washington state.
And she's moving away from her friend network, to a radically different climate. And what happens if her child relocates to another state?
Dang 18k in taxes!?
Why did you pick a woman w $3m in assets from a marriage???/ DUH!!!
When planning for your future you should double the amount needed... The state of matrimony in this society is frankly horrid and given the "no fault" friendly attitude of the justice system the "other" gets half.. So the smart spouse IF they are the primary if not SOLE income source towards retirement should save double... And plan on the fact that they won't have but half of the eggs in the nest
Too true
I can see why your marriage might not last. Your spouse is the “other”, and you don’t really see the marriage as a partnership.
James just made 10k off me for Beth's phone #. 😂
Beth could sell her home and move to TN!! Imagine how much money she would have then!
Beth got used to the good life when she was married
no... Beth's spouse did. - Beth worked her ass off and raised a family with no financial compensation... or earned social security for the years that she WORKED.
Bizarre statement
No credibility - case study w/ 2+ million assets. Singles, take advice from someone who really listens & is more in touch.
Realty check for average earners.🥺
What I learned from this video is I am going to have to work until I die. Who's going to employ a falling apart 70-year-old?
There are places out there that will hire you. I know how frustrating it can be. My mom took a job in her mid-40s that paid half what she was accustomed to making, but it did have a little pension. She was a civil servant and retired 10 years later and she was done. My mother-in-law worked as a cashier at the Museum of Natural history in NY and she worked until two weeks before 90. She had worked there for decades, starting in her 70's. She was very good at math and she was reliable. She enjoyed working and she was financially free. She owned her own home free and clear and it also provided her with rental income. Being 70 doesn't necessarily mean that no one will want you.
Not sure why it’s limited to single women.
Because almost EVERYTHING is addressed to married couples. Finally, something for singles. Geez.
Hope you read the comments here, James. This is so far removed from what many of your viewers were hoping to hear you talk about. Please consider a video for "real single people", not wealthy divorcees.
Why is this just single woman? What about single men?
Pretty sure you can figure out that this would apply to single men, non-binary folks, or singles that identify as anything else. Not too complicated.
@@Summerdee223 Pretty sure we all can figure out that you're a condescending Knob used to spreading your tosh on message boards . Not too complicated.
Leave all the drama out of the life of a fictional character named "Beth." I don't want to hear about her entire fictional life or her fictional beliefs or fictional preferences. Just tell me about "Retirement Planning for Singles - Don't make these mistakes" like the title says.
Titles a video "Retirement Planning for Singles:..." proceeds to make a video about a woman who until five minutes ago was married. Perhaps next time make a video about actual single people, just saying.
BS. Period. Or put in titles that this is for rich people.
Put the crack pipe down buddy!