More people in Canada today are retiring or living in retirement alone.
Recent census data from Statistics Canada shows that the percentage of one-person households now is at a high in the country’s 150-year history. The number of one-person households has risen steadily since 1951 and accounted for 28.2 per cent of all households in 2016, the highest share since Confederation in 1867.
A number of social, economic and demographic factors have contributed to this increase.
“Income redistribution, pensions and the presence of women in the workforce have led to more people being economically independent today than in the past, especially in older age groups,” the census report says. “In addition, higher separation and divorce rates have led to more people living alone instead of couples (and) population aging and higher life expectancy has also contributed to the increase in one-person households given that a larger share of seniors live alone as compared to other groups.”
Canada is not alone in this phenomenon. Its percentage of one-person households (28.2 per cent) was similar to that of the United States (27.5 per cent in 2012) and the United Kingdom (28.5 per cent in 2014) but lower than many other industrialized countries such as France, Japan, Sweden, Norway and Germany.
Singles — whether you are single by not marrying, through divorce or through the death of a spouse or partner — face unique challenges when preparing for retirement.
With couples there is usually one person who takes the lead in financial matters and the other person is in the background, but when you’re single it’s usually only you, so it becomes extremely important to understand your financial situation – what are your assets and liabilities, your income and expenses – and to create a budget to manage inflows and outflows.
As well, when you’re single there’s often no one to tell you you’re not saving enough or to pull in the reins on your spending, so it’s even more important to work with a financial planner and be willing to take constructive criticism and advice.
Singles usually will have only one income and have to shoulder the burden of expenses themselves while couples often will have two incomes in the household and share expenses, allowing them build a bigger nest egg for retirement.
Singles also are alone in terms of preparing for their care in their older years.
“Most people who are in a relationship will assume their partner or spouse will care for them if they become ill or incapacitated,” says Christine Van Cauwenberge, vice president of tax and estate planning with Investors Group. “This is not so obvious for singles who have to manage the risk when it comes to their care.”
Singles, she says, should consider taking out critical illness and/or long term care insurance and need to determine who their powers of attorney will be for their property and health care.
If there are no children involved they may want to choose a corporate trustee to handle their property and finances. This is a commercial organization – usually a bank trust department or trust company – which will manage and protect your wealth and carry out any of your individual wishes.
“You can determine how much money you want set aside for personal care with a personal support work or a care giver to continue to live at home,” Van Cauwenberghe says. “Don’t hesitate to pay for what you want.”
Many people may find themselves single in or nearing retirement due to “grey divorce.”
“We are seeing a lot of that these days,” Van Cauwenberghe says. “If this happens the best thing to do is to start with a blank sheet of paper and redo your financial, retirement and estate plans because now you are alone.”
You may have to decide whether you will have to change the timing of your retirement, prepare a new will, power of attorney, beneficiaries and set new goals and expectations for your retirement.
“When divorce happens people may forget these things or may think that they can’t make changes,” Van Cauwenberghe says. “They usually are so overwhelmed with the situation that they can’t think straight.”
No matter what state you are in – single, divorced or widowed — it’s a good idea for everyone to stress test their plans for the three D’s – death, divorce and disability. Many people just are not adequately prepared for these eventualities should they occur.
Talbot Boggs is a Toronto-based business communications professional who has worked with national news organizations, magazines and corporations in the finance, retail, manufacturing and other industrial sectors.