Planning for Solo Retirement: Using an Individual Retirement Annuity to Build Security
Retiring alone is not uncommon. Nearly one in three Americans over 65 now lives as a single-person household. Solo retirement is not simply a scaled-down version of couples retirement. It carries unique financial pressures that require a tailored response. An individual retirement annuity can be one powerful tool in building the security that solo retirement demands. It works best, however, as part of a broader, well-coordinated strategy. Understanding the full picture is where careful planning begins.
The Real Cost of Retiring Alone
Single retirees pay more per person for almost everything. Housing is one of the largest ongoing expenses. The average retiree household spends over $22,000 per year on housing alone. That cost does not shrink much when there is only one person absorbing it.
Healthcare compounds this burden. In 2024, seniors averaged $7,799 annually on medical expenses. Long-term care represents an even steeper concern. Women, who make up a large share of solo retirees, tend to live longer and face higher lifetime care costs. Per capita lifetime healthcare expenditure is a third higher for women than for men.
Consider some of the numbers at play:
- National averages for assisted living facilities exceed $60,000 per year
- In-home care services can run $25 to $35 per hour for consistent support
- Medicaid may provide a safety net, but it carries strict asset limits that can complicate estate plans
Addressing these costs early gives you more flexibility. Waiting until retirement to plan for them can narrow your options considerably.
Building an Income Floor That Holds
An income floor is the baseline level of guaranteed income needed to cover essential living expenses. For solo retirees, establishing a solid floor is not optional. There is no second income to absorb unexpected shortfalls. Three tools tend to anchor most income floor strategies: Social Security, annuities, and dividend-paying investments.
Social Security optimization carries particular weight for single retirees. Delaying benefits past full retirement age increases monthly payouts meaningfully. Waiting until age 70 can raise lifetime income by up to 24% compared to earlier claiming strategies. That difference matters even more without a partner's income nearby.
Individual retirement annuities complement Social Security well. A single-life annuity, funded through an IRA or purchased separately, delivers guaranteed income for life. Single-life annuity payouts run higher than joint-life options. That gap translates into more monthly income from the same initial investment. Contribution limits for an individual retirement annuity held inside an IRA follow standard IRA rules. Those under 50 may contribute $7,000 per year. Those 50 and older can contribute up to $8,000.
Dividend-paying stocks offer a third layer of income. They can provide income potential that adjusts over time. No two retirement portfolios are identical, though. The right combination of annuities, Social Security timing, and dividend income depends on your personal goals and circumstances. Working with a financial advisor helps ensure each piece supports the others.
The Case for a Financial Advocate
Married retirees often rely on each other as a natural system of checks and balances. A spouse notices missed payments. A partner raises questions at medical appointments. A companion steps in during a health crisis.
Solo retirees need to build that layer of support intentionally. A trusted financial advocate fills this role. This person should know where your accounts are held. They should understand your income sources and monthly expenses. They should also know what choices you would want made on your behalf. This includes situations where you are unable to make those calls yourself.
This extends beyond day-to-day money management. It is about having someone accountable when illness or cognitive decline affects your judgment. A financial advisor with deep knowledge of your situation can serve as a consistent and reliable point of contact. Their familiarity with your full financial picture becomes invaluable across the years.
Some solo retirees also designate a trusted friend or family member as an authorized contact with their financial institutions. This adds a practical oversight layer without transferring control of your assets. Building these relationships before they are needed is a proactive step in solo retirement planning.
Estate Planning When There's No Spouse
Without a spouse, the question of who inherits, who decides, and how your wishes are recorded requires direct attention. Nothing transfers automatically. No one is legally empowered to act for you without the right paperwork in place.
Key documents every solo retiree should have include:
- A durable power of attorney naming someone to manage financial decisions when needed
- A healthcare proxy designating a trusted person for medical choices
- An up-to-date will naming your beneficiaries and executor clearly
- A trust, where appropriate, to manage asset transfers outside of probate
- Current beneficiary designations on all accounts, including your individual retirement annuity and life insurance policies
Beneficiary designations on financial accounts take legal precedence over your will. An outdated designation can redirect assets to someone you no longer intend to benefit. Review them after major life changes, such as the death of a named individual or a shift in personal relationships.
Estate planning also raises deeper legacy questions. Who do you want your wealth to support? A charity, a sibling, a close friend? Having everything in writing translates your intentions into legally binding directives.
Take the Next Step Toward Solo Retirement Security
If you are heading into retirement without a partner, you deserve a plan designed specifically for your situation. At Balboa Wealth Partners, we work with solo retirees and high-net-worth individuals to build considered, personalized retirement income strategies.
Our team can help you evaluate whether an individual retirement annuity fits your income floor. We can also help you time Social Security for maximum benefit. Ensuring your estate documents reflect your actual wishes is part of that process, too. Reach out today to schedule a conversation. You have worked too hard to leave your retirement security to chance.
ABOUT JEFF
Jeff Gilbert is the founder and CEO of Balboa Wealth Partners, a holistic wealth management firm dedicated to providing clients guidance today for tomorrow’s success. With over three decades of industry experience, he has worked as both an advisor and executive-level manager, partnering with and serving a diverse range of clients. Specializing in serving high- and ultra-high-net-worth families, Jeff aims to help clients achieve their short-term and long-term goals, worry less about their finances, and focus more on their life’s passions. Based in Scottsdale, Arizona, Jeff works with clients throughout the entire country. To learn more, connect with Jeff on LinkedIn or email jgilbert@balboawealth.com.
Advisory services provided by Balboa Wealth Partners, Inc., an Investment Advisor registered with the SEC. Advisory services are only offered to clients or prospective clients where Balboa Wealth Partners and its Investment Advisor Representatives are properly licensed or exempt from registration.
