Single? Make Financial Planning a Priority
~ By Herb White, CFP, MBA ~
Whether you are suddenly single or single as a choice, being savvy about money is an essential fact of life for you. It’s even more critical if you must make financial decisions that will affect you for years to come. And, while you have many financial issues in common with married people, you also have some important issues of your own. This article takes a brief peek at those issues–retirement, health insurance, housing and managing when you have children.
First of all, being single shouldn’t preclude planning for retirement. Whether you are 21 or 61, retirement planning means taking a different perspective than your married friends do. “Plan ahead,” for instance, shouldn’t be an empty phrase–something you’ll get around to someday.
Funding that IRA or employer sponsored plan should be right near the top of your to-do list. In 2014, you may contribute up to $17,500 for an employer-sponsored plan. If you are age fifty or older, you can contribute an additional $5,500.
Stretch to fund that retirement account. Being single means your future depends on your pension and no one else’s. Be smart about it. For example, if you are changing jobs, don’t cash out your 401(k), although it may be tempting. Roll it over into an IRA or another employer plan instead or consider leaving the money in your former employer’s plan, if permitted.
Do your children come first at your house? Don’t let that philosophy keep you from taking care of you! Find a way to keep funding your retirement over the years–even if it is just pennies during tight times. Remember, anything you save will compound over the years and become your retirement nest egg.
Speaking of the children, singles often forget about purchasing insurance until it is too late. This includes long-term care insurance, which may be affordable while you are younger but prohibitive as you age. Also consider disability income insurance, which will provide cash for your family if you are unable to work. Disability insurance will pay a percentage of your income (usually 60%) in that event.
If insurance plans with low deductibles are prohibitively expensive, don’t rule out one with a high deductible. At least you will be protected from catastrophic financial losses. You’ll pay the small expenses yourself, but the large ones that could ruin your financial future will be covered by insurance.
In addition, be sure to have a living will and appoint a guardian for your young children in case something should happen to you. Without a guardian, probate court will appoint someone–it could be a stranger who will in effect be raising your kids. When you interview people for the role of guardian, even if it’s a relative, ask the tough questions. Examples of questions are: how is their health, what is their household situation, are there kids at home, what are their beliefs on issues like religion or politics, what about their finances? If you are unsure whom to select, remember, you can always change your mind, but it’s better to have someone named now rather than putting it off until the perfect candidate comes along.
Do you really need that large home? Do some research on the housing market in your area. Although you may feel content in your home and have no desire to move or downsize, you might get some fresh ideas by driving around looking at other homes. Attend an open house, just for inspiration. Check online for offerings of shared housing and other creative ideas. Keep in mind, though, that a home mortgage is a significant tax write-off, and being single, you may need it.
If you find yourself struggling with finances, or are simply unsure about the best course of action to take as a single, get some good advice. A financial advisor will help you take a look at your whole financial scenario and provide a plan for now and for years to come.
Tune in to “America’s Wealth Management Show” sponsored locally by Life Certain Wealth Strategies, Saturdays from 12 noon to 1 p.m. on news radio 630 KHOW.
Provided by courtesy of Herb White, MBA, CFP©, a Certified Financial Planner with Life Certain Wealth Strategies, 8400 E Prentice Ave, #715 Greenwood Village, Colorado, www.lifecertain.com, (303) 793-3999. Securities and investment advisory services offered through Woodbury Financial Services, Inc. Member FINRA, SIPC and Registered Investment Advisor. Life Certain Wealth Strategies and Woodbury Financial Services are not affiliated entities. There are several choices investors have when rolling over money from one plan to another. Since each choice has its own implications, it is recommended that you discuss and compare all potential fees, expenses, commissions, taxes and legal ramifications with your qualified advisor before making a rollover decision.