How should a single person plan for retirement

Archana is single and nearing 50. At the peak of her career, she is enjoying every bit of the freedom her job offers, both emotional and financial. She leads an affluent lifestyle, but as a single saver, she does face some specific hurdles while planning for retirement and figuring out support in her future life.

While married couples have the potential to save twice as much, they don’t typically spend twice of what singles do. Archana’s living expenses are not likely to be exactly half of that of a couple’s, but more likely 70%. Therefore, she must make every effort to maximise her retirement savings, especially now when she is at her earning peak.

Instead of splurging, she must put her high income to work for her. As she is starting late, she will need to put away a huge chunk of her income towards retirement savings. She must budget for higher medical and living expenses post-retirement.

One of the most practical ways of ramping up savings would be by cutting down on housing costs. She could consider moving to a smaller apartment because as a single, she can easily downsize on space.

In the absence of any dependents or family, she must nominate someone trustworthy and close to her as her medical proxy, in the possibility that she is incapacitated to take decisions for herself. She must also initiate estate planning and put a will in place, identify the beneficiaries and nominate a trustee or power of attorney as someone who can take charge in her absence.

She could choose a friend, a relative or even a professional attorney. She must also put a plan in place for where she wants to end up post-retirement— a retirement home for the elderly or hire a personal care-giver in case she wants to continue living independently.

In the absence of any dependents, life insurance does not make any sense for Archana. However, health insurance is key. She should immediately review her medical insurance cover provided by her employer and upgrade it so that it is not only sufficient but also available even after she retires. Again, as she has no spousal income support to fall back on, she must also take disability insurance.

The scariest part about planning for Archana (as a single) is that there is no safety net and no fallback. So it would be ideal for her to hope for the best and plan for the worst, so she has it all covered.

(The content on this page is courtesy Centre for Investment Education and Learning (CIEL). Contributions by Girija Gadre, Arti Bhargava and Labdhi Mehta.)