How to Plan for Retirement as a Single Person

Many brochures for retirement planning feature a smiling silver haired couple taking sunset walks into their sunset years. However, if you’re sailing solo into your golden oldies, you may be alone in your house, but you’re not alone in your demographic. Statistics Canada reports that more Canadians are living alone than ever before. In 2021, one person households accounted for 29.3% of all Canadian households – the highest share of any household type. This number increases among older adults, with 42% of people aged 85 and older in private households living alone.

When you’re planning for retirement as a “one person household,” the same basic financial planning principles still apply, but with a few added concerns, considerations (and opportunities!)

Determine how much you’ll need to save

The truth is, you’ll need to save more for retirement as a single person. Single retirees can generally expect to spend about 70% of the combined spending of a retired couple. This is mostly because singles don’t have the tax advantages of pension splitting or the same opportunities to share expenses as couples do. However, there are ways to get creative about splitting the costs of living, such as using a ride-sharing service or renting out a room in your house.

You can expect to spend less in retirement than you did when you were working. Costs like commuting and clothing are greatly reduced, your mortgage may be paid off, and you’re likely paying less in taxes. In 2019, single retirement-age Canadians spent $31,672 per year on average. If you own your own home, expect to need 60% of your pre-retirement income. If you rent, you can expect to need 70%. Having clear retirement goals and a vision for the lifestyle you want to lead during retirement will help you estimate the amount of money you’ll need to save.

Understand the tax and government benefits you can access

CPP: If you worked in Canada before you retired, you likely paid into the Canadian Pension Plan and you are eligible to receive CPP payments when you retire. The amount you receive depends on how long you worked, how much you contributed to the plan, and how old you are when you start receiving payments.

OAS: All Canadian citizens (and legal residents of at least 10 years) over the age of 65 are eligible to receive Old Age Security payments. In 2022, single Canadians could receive up to $685.50 per month (more for those over 75).

Lower income Canadians receiving OAS can also receive a Guaranteed Income Supplement. In 2022, single, widowed, or divorced Canadians earning less than $20,748/year could receive up to $1,023.88/month. You can also access certain tax credits such as the age amount, the GST/HST credit, and the Home Accessibility Tax Credit.

Assign a power of attorney

With married couples, one spouse is usually the default person to make decisions on behalf of the other spouse, if required. As a single person, it’s more important to clearly define, in an official document, who is authorised to make decisions on your behalf.

Assign a power of attorney to make sure your wishes are followed and to take care of your financial or health care decisions should you become incapacitated. Have a frank discussion with them so they are not surprised or confused by anything written down in your advanced directive.  Your power of attorney could be a trusted friend or family member, or a professional you’ve hired. They should be aware of your assets and liabilities and have access to your important papers and passwords.

Set up an estate plan

Designate beneficiaries for your retirement accounts and create a will or trust to ensure your assets are distributed according to your wishes. This is particularly important for singles without children because there may be no obvious beneficiary. 

Get adequate insurance (long term care insurance, disability insurance)

As a single retiree, you may have fewer caregiving responsibilities compared to those with a partner. Of course, the inverse here is that you may need to take extra steps to plan for your own caregiving needs. Ensure you have sufficient disability insurance, loan insurances, long term care insurance, and life insurance.

Explore retirement living options early

Making big decisions under pressure is stressful, and if you’re in a time crunch, you may be faced with limited options. Start exploring retirement living options well before you need to.  If necessary, give yourself time to sell your current home for a fair price. Research the waiting times and any perks or restrictions at potential retirement communities. Consider alternate living arrangements, such as taking in a younger roommate at reduced rent in exchange for help around the house. As a single person, you only have your own needs and preferences to consider, so you’ll have more flexibility in your housing and lifestyle choices.

Stay informed and seek professional advice

As a single retiree, you are the sole decision maker for important aspects of retirement planning, such as investments, healthcare choices, and long-term care decisions. This puts the responsibility on you to stay informed, regularly review your plan, seek professional advice when needed, and make decisions that align with your goals and values.

Financial planning is a big part, but not the only part of retirement planning. It’s also important to maintain a strong social network and a healthy lifestyle. There’s much to look forward to as a solo retire. You’ll have the freedom to explore the hobbies and plans you’ve always wanted to—without having to negotiate your decisions with someone else!

For comprehensive retirement planning advice as a single person, book a call with ABCU trusted team of financial advisors: 1-888-929-7511.