Retirement Planning Advice For Singles

Retirement planning advice for singles is similar to that for couples – track your expenses, clear up debt, automate your savings, and keep investment costs low.

However, being single, whether by choice, or as a result of being widowed or divorced, presents some financial planning challenges. The biggest challenge of being a single person is you don’t have anyone else to rely on and you also face higher per person costs for such things as housing and taxes, and even travel.

Although those who are widowed or divorced can have additional unique hurdles, these are general planning strategies for singles to ensure you can enjoy your retirement.

7 Retirement Planning Tips For Singles

7 Retirement Planning Tips For Singles

1. Increase your income

Be proactive in increasing your salary. Look at which industries pay the best and target your job search there. One of the advantages of being single is increased mobility if a better opportunity presents itself in another city or province.

Also, going back to school to gain new skills could help boost your income.

2. Make savings a habit

The fact is, most singles will have to save a higher percentage of their incomes than couples because they don’t have the same economies of scale. This makes budgeting even more essential for singles so you can allocate money to fund your financial goals.

A rule of thumb is singles need to budget for 70% of the combined spending of a couple to achieve a similar lifestyle.

The good news is that childless singles often have more opportunity to save, especially during their 30’s and 40’s when many couples are raising kids, and can build a substantial nest egg with smaller contributions – using the magical power of long term compounding.

If you are a homeowner and have finally paid off the mortgage, you can supercharge your savings and direct that former mortgage payment amount to your investments.

3. Do your planning

Retirement planning is both simpler and harder for singles. On one hand, you can set your own priorities for lifestyle, travel and activities. On the other hand, you’re also on your own to save.

Consider your vision when planning how much to save. What will retirement look like for you – and roughly what would it cost.

Calculate expected payments from government benefits and pensions (if any). The rest needs to come from your savings.

You may want to consider securing a guaranteed income with an annuity. Singles will opt for the maximum benefit which means a higher payment than couples who often choose spousal survivor benefits.

Taking a realistic look at your financial resources helps you to make important decisions, such as whether you need to work longer or delay the start of CPP/OAS benefits to increase the payments.

4. Don’t overstuff your RRSP

Financial experts recommend stopping RRSP contributions after a certain amount (e.g. $200-250K) and saving in your TFSA and non-registered accounts instead.

Single people end up paying more tax on RRSP/RRIF withdrawals because they can’t take advantage of income splitting which allows people to transfer income to a lower-earning spouse to reduce tax payments.

Related: Which accounts to tap first in retirement?

You can achieve a more tax efficient income stream with a mix of RRSP/RRIF, TFSA and non-registered withdrawals to supplement your pension benefits.

5. Build a safety net

One of the drawbacks of being single is that is a financial crisis comes up, it’s up to you to solve it.

As a single, you are not able to rely on a spouse’s income

Make sure you have adequate disability insurance in the years leading up to retirement. Your retirement plans can be derailed by a premature disability if you have to use your savings.

You might also want to look into long term care insurance which will pay for professional care if you need assistance performing day-to-day tasks, either at home or in a nursing home.

Build up an emergency fund – at least six months of expenses.

If you own a home, a Home Equity Line of Credit may be an option for additional funds, if needed.

6. Get your legal house in order

Spouses have legal standing to make decisions if a partner becomes incapacitated. But, if you’re single you’ll need to designate someone as power of attorney for your finances and health. You can use a sibling or other relative, but consider geography. If you don’t have family living nearby, a close friend or even your lawyer might be a better choice.

Pay extra attention to your will and beneficiary designations. Married couples enjoy some spousal inheritance rights which don’t apply to singles. Consider the estate tax implications for the assets you want to pass on to your heirs.

7. Nurture your network

Having friends and relatives who care about you will not only increase your enjoyment during your retirement years, they can help you out if you have a medical or other emergency

You can band together to share resources which can help reduce your living expenses. You might even decide to have a roommate, or rent out a portion of your home.  

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  1. Juliana on September 15, 2017 at 1:54 pm

    Thank you for focusing this article on singles. I’m happy to see focus given to those of us who are single!

    • boomer on September 16, 2017 at 10:54 am

      Thanks Juliana. I have noticed that most financial articles are geared more to couples.

  2. Cheryl on September 16, 2017 at 8:57 pm

    Thanks for this article. Most articles are geared to couples. Like the average household income is $70,000 and I have no hope to reach that income as a single, so too many articles aren’t applicable to my situation. You brought up a couple of points I need to work on. Thanks.

  3. Christina on September 16, 2017 at 11:31 pm

    Yes thanks. You don’t see a lot of articles geared towards singles. I’m grappling with whether to invest in the rrsp vs tfsa right now so you provided food for thought.

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