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Single? 9 steps to plan for retirement

Key takeaways

  • Capitalize on employer-sponsored benefits like a 401(k) and HSA.
  • Look into long-term insurance as early as possible.
  • Understand your Social Security options.
  • Build a support team of professionals to help you achieve your goals.

Living life as a single comes with plenty of perks. You don’t have to spend holidays with occasionally irksome in-laws, and you can book a bike trip through Italy without first conferring with a spouse.

Yet, going solo also means footing many bills alone, not having the extra security that can come with 2 incomes, and taking some extra care when planning your retirement years. The silver lining is that one-person households can have lower expenses than multi-person households and there are never any arguments about spending or goals.

What is the average retirement income for a single person?

The average income for a single person over 65 is about $40,800 for single women and just under $54,500 for single men, according to the Census Bureau.1 But it’s also important to consider the median retirement income for single people over 65 as particularly high-income outliers may push the average amount higher than the typical single person’s earnings. The median income for single women over 65 is $27,400 and $32,200 for single men. (Reminder: Median income considers the middle value in a range of incomes so it's not as affected by extreme outliers as the average.)

For comparison, the median income of unmarried people living together over 65 is $73,400 and for married couples it's $76,500. This shows that it's particularly important for people living alone to try to prioritize savings over the course of their career.

How should you prepare if you plan to retire as a single person?

Here's what to know: Soloists can have a rewarding retirement. You may be amazed by what you can accomplish with some foresight and financial planning.

It's really empowering to take control of your own future, says Ashley Tran, vice president and branch leader at Fidelity Investments' Tampa Investor Center.

Here are 9 steps to set yourself up for long-term success.

  1. Envision your ideal retirement. Consider when you’d like to retire, where you want to live, the lifestyle that appeals to you, and the people you’d like to see regularly. Once you get clarity on your long-term goals—knowing, of course, that things can change—you can create a flexible financial roadmap on how to best get from here to there. If you have goals to aim for, that can inject fun and a sense of purpose into your plans.

    Read Viewpoints on How to plan your retirement

  2. Assess your current finances. To get from point A to point B, you first must know where you currently stand. When it comes to financial planning, that means evaluating your savings, debts, expenses, and income sources.

    On you can easily create a budget to categorize expenses and help reach your savings goals: Help me budgetLog In Required.

    If you need help keeping day-to-day spending and saving on track, check out a money-management app like Fidelity Bloom®.

    If you don't know already, find out where you stand compared to your retirement savings goals and get tips for making more progress: Make progress toward your goals on your timeline

    For even more tips, read Viewpoints on Retirement roadmap

    You don't have to do it alone—consider speaking with a financial professional to help create a financial plan that can help you meet your goals.

  3. Max out your HSA or FSA if you have access to one of them. Saving for health care costs in a flexible spending account (FSA) or health savings account (HSA) can make good sense. Both types of accounts let you pay for qualified health care costs with pre-tax money. If you have an HSA-eligible health plan, try to invest up to the contribution limit.

    HSAs have 3 key tax advantages:2

    • You don't pay federal income tax on contributions.
    • When you invest a portion of your balance, you aren't taxed on the earnings as it grows.3
    • Paying for qualified medical expenses is tax-free, whether you make the withdrawals now or in the future.

    Consider keeping a portion in cash to cover your deductible and investing the rest for the future. Read Viewpoints on How much cash should you keep in your HSA? No HSA? Consider opening one if you have an eligible health insurance plan: Health savings accounts.

    If you don't have an HSA-eligible health plan but do have access to an FSA through your employer, it can be worth considering. Like an HSA, the FSA lets you set aside money before it's been taxed to pay for health care costs. Any withdrawals are also tax-free, provided you use them to cover qualified medical expenses.3 This can help increase the money you have available to pay for medical bills. But it's important to know that funds saved in an FSA generally must be used in the same year as the contribution. This means that when the new benefit year begins, you may forfeit whatever funds remain in the account from the prior year. Some employers may allow you to carry forward a small amount of your unused balance or can offer a grace period (normally up to 2.5 months). Check with yours to see if you can carry over a portion of your FSA at year end.

    Major differences between HSAs and FSAs HSA FSA
    You can spend the money on qualified medical expenses. Yes Yes
    100% of your unused funds carry over year to year. Yes  
    You can invest the money for potential tax-free growth. Yes  
    Your contributions may be pretax. Yes Yes
    Your contributions may be tax-deductible. Yes  
    Your account belongs to you, not your employer. Yes  
    You can contribute more for a family than an individual. Yes  
    100% of your elected amount is available on day one.   Yes
    You must have an HSA-eligible health plan as your only health insurance. Yes  
    You must be enrolled in the plan through your employer.   Yes
    You can use the funds for qualified medical expenses in retirement. Yes  

    Read Smart MoneyTM on HSA vs. FSA: Which is right for you?

  4. Capitalize on employer-sponsored retirement plans. If you can, contribute the allowed maximum to a 401(k). For 2024, employees can contribute up to $23,000 to a traditional 401(k) plan. Those age 50 and above can contribute an extra $7,500 as a catch-up amount. The contribution limit for a Roth 401(k) is also $23,000. If you're eligible for both a Roth 401(k) and a traditional 401(k), you can divvy up your contributions between them, but the total you put in can’t exceed the annual limit of $23,000, or $30,500 if you're age 50 plus.

  5. If you have an HSA, use it strategically. “Health care is expected to be one of your largest expenses in retirement, so it is critical to plan for it,” says Tran. Consider that a single person aged 65 in 2023 may need approximately $157,500 saved after tax to cover health care expenses in retirement.3 HSAs are an effective way to stash cash for these bills, as they are considered “triple tax-advantaged,” says Tran. There’s no upfront income tax, the money grows tax-free, and you don’t pay taxes when you take the money out if used for qualified medical expenses.

    If it’s in your budget, you can pay current medical bills out of pocket and let your HSA grow, as there’s no time limit for reimbursements. Today’s money can then cover your health care costs in your later years.

    Read Viewpoints on 5 ways HSAs can help with your retirement

  6. Look into long-term care before you need it as it is one of the best gifts you can give your loved ones. “It is important to also understand your options for protecting yourself and your family against the cost of a long-term care event, especially because it can be financially advantageous to purchase a policy sooner rather than later as the cost goes up as you get older and you run the risk of not being insurable due to health conditions,” Tran says. There are different options for long-term care, including government programs, self-funding or hybrid policies—which combine both life insurance and long-term care—and traditional long-term care policies. You can also use HSA funds to cover these insurance costs in certain situations, notes Tran.

    Read Viewpoints on Long-term care: Options and considerations

  7. Consider extending your career if possible. Singles may work longer and retire later than those who are married for both financial and non-financial reasons, Tran says. “Expenses can be higher when only having one provider of income, which can mean you have to work and save longer for retirement,” she says.

    If your employer contributes to your 401(k) or HSA, it's like getting free money to help support your later years plus any profit sharing and other employer benefits.

    In addition, people may choose to work longer because of the community that can come from interacting with colleagues.

  8. Formulate a Social Security plan. It’s crucial to have a well-planned Social Security strategy, as your benefit amounts can change depending on when you decide to draw income. If you are widowed or divorced, depending on how long you were married, you may qualify for benefits based on your prior spouse’s work history, notes Tran.

    See how claiming Social Security at different ages could impact your benefit: Calculate your Social Security

  9. Create a team of trusted professionals. Among the people to consider: A financial planner, accountant or other tax professional, a lawyer, a professional who understands Medicare options, and a trusted contact for emotional support. These key players can help you as you navigate the world of taxes, estate planning, and naming a power of attorney and health care proxy. “A person granted power of attorney for financial affairs can act on your behalf if you become incapacitated, and a health care proxy allows you to name someone who can help follow your intentions in the event that you cannot communicate your wishes,” says Tran.

    Read Viewpoints on Solo aging: Who can you call for aid and support?

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Remember to update your estate plan too

This won’t boost your net worth, but it can give you peace of mind. “Stay on top of your beneficiary designations for all of your different accounts, such as insurance, investments, and savings,” says Tran. Ensure that your assets will go where you want, such as to a beloved niece or favorite charity. “If you were previously married, make sure your current beneficiaries are up to date and changed if that is your desire,” Tran says.

Read Viewpoints on Estate planning for singles

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1. Current population survey 2023 (CPS) Annual Social and Economic (ASEC) Supplement; Bureau of Labor Statistics and the Census Bureau; Tables for household income: HINC-02. 2. Estimates based on a hypothetical single person or opposite-sex couple retiring in 2023, 65-years-old, with life expectancies that align with Society of Actuaries' RP-2014 Healthy Annuitant rates projected with Mortality Improvements Scale MP-2020 as of 2023. Actual assets needed may be more or less depending on actual health status, area of residence, and longevity. Estimate is net of taxes. The Fidelity Retiree Health Care Cost Estimate assumes individuals do not have employer-provided retiree health care coverage, but do qualify for the federal government’s insurance program, Original Medicare. The calculation takes into account cost-sharing provisions (such as deductibles and coinsurance) associated with Medicare Part A and Part B (inpatient and outpatient medical insurance). It also considers Medicare Part D (prescription drug coverage) premiums and out-of-pocket costs, as well as certain services excluded by Original Medicare. The estimate does not include other health-related expenses, such as over-the-counter medications, most dental services and long-term care. 3.

With respect to federal taxation only. Contributions, investment earnings, and distributions may or may not be subject to state taxation.

This information is intended to be educational and is not tailored to the investment needs of any specific investor.

Investment decisions should be based on an individual’s own goals, time horizon, and tolerance for risk.

Keep in mind that investing involves risk. The value of your investment will fluctuate over time, and you may gain or lose money.

Views expressed are as of the date indicated, based on the information available at that time, and may change based on market or other conditions. Unless otherwise noted, the opinions provided are those of the speaker or author and not necessarily those of Fidelity Investments or its affiliates. Fidelity does not assume any duty to update any of the information.

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