Virginia Beach, VA (Law Firm Newswire) December 4, 2015 – Retirement planning can be a very challenging process for couples, and even more so for singles.
Several Americans will enter their retirement years on their own for various reasons, such as the death of a spouse, divorce and different lifestyles. According to the 2013 U.S. Census, 54 percent of women and 27 percent of men age 65 or over were unmarried.
Financial advisers claim that the retirement planning needs of singles can be extremely different from those of married couples, and that many singles are unprepared. A study by Rand Corp. revealed that single people are much more likely to fail to sufficiently save for retirement than are married couples. Researchers Michael Hurd and Susann Rohwedder discovered that 20 percent of married couples will save an inadequate amount for retirement, but the rate for single men and women was even higher. While 35 percent of single men will enter their retirement years without having saved enough, 49 percent of single women will be unprepared for retirement.
“In planning for retirement, it is important to be aware of the ways in which one can minimize expenses and reduce taxes,” said Andrew H. Hook, a Virginia life care planning attorney with Hook Law Center, with offices in Virginia Beach and northern Suffolk. “An estate planning attorney can help singles make wise choices that will help lower their tax burden.”
For those who recently lost their spouses or became divorced, housing costs may have increased as a percentage of income, and some incomes may be less certain. As some people mistakenly believe, a single person’s income is not half of a couple’s income; it could be 60 percent, or 80 percent, of a couple’s income, or the same, unless the single individual greatly lowers housing expenses by either downsizing or getting a roommate. According to research conducted by AARP, 40 percent of adults will think about either option in an effort to reduce expenses.
Tax experts claim that single adults frequently confront more challenging tax issues, particularly as they approach retirement age. During prime earning years, singles can pay a hefty tax, especially since they do not have the benefit of child tax credits, a spousal exemption, and no one with whom to share the benefits of filing jointly.
To reduce the adverse effects of taxes, advisers recommend that their single adult clients, who have their own businesses or side businesses with income from freelance work, establish a solo 401(k). It would also be sensible for single adults to transfer some of the funds from their traditional IRA accounts into a Roth IRA, from which there are no taxes on withdrawals.
Hook Law Center
295 Bendix Road, Suite 170
Virginia Beach, Virginia 23452-1294
5806 Harbour View Blvd.
Suffolk VA 23435