Q: There is a very common contingency that no one seems to plan for. Everything is planned for couples — two Social Security checks, two retirement funds, etc.

Since most of us are not fortunate enough to go out together, one will almost certainly be left to get along with half the income while our expenses stay essentially the same.

Please address this problem in a future column.

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A: You’re absolutely right. If you are married at retirement, the odds are that one spouse is going to spend some time living alone.

Yes, two people can’t live for the same price as one. But a rule of thumb suggests that two people can live for 160 percent of the cost of one.

The big thing that usually doesn’t change in going from couple to single is shelter expense. Most people want to continue living where they have been living. Still, where you live is a choice.

Otherwise, you eliminate the personal expenses of one person: medical expenses including insurance, transportation, cellphone, clothing and personal care, not to mention a person’s portion of meals away from home and maybe some reduction for meals at home. It all counts.

Changes are a mixed bag on the income side.

In a fairly typical couple, for instance, the Social Security survivor benefit is likely to be about 65 percent of the combined benefit for a couple.

While pension benefits for survivors vary greatly, the most typical figure is 50 percent. So half of that income would be lost.

The survivor is likely to get all of the financial assets, so that person will get 100 percent of the investment income.

That should compensate for some of the income losses elsewhere. The survivor will also be able to spend a bit more from those financial assets since that person will be figuring for a single life expectancy instead of a joint life expectancy.

In a couple where there was no pension (increasingly common), but income from financial assets was equal to income from Social Security, the net income reduction would be about 18 percent.

Is the change a piece of cake? No. However the numbers work, it’s a tough transition. But it isn’t a guaranteed disaster. It is a real test of adaptation.

Adaptation brings us back to the shelter decision.

If you are widowed while living in a single-family home, it’s a good time to rethink what’s best for you. As I’ve pointed out in many columns, most Americans are over-invested in personal real estate.

The biggest single lever on our retirement standard of living is choices about shelter.

A widowed person could easily decide that living in a typical suburban home isn’t what’s best. A move to a smaller condo or rental apartment could liberate equity for investment and reduce living expenses at the same time.


Copyright 2014, Universal Press Syndicate