In Canada 43% of seniors 65 or older are single, says Statistics Canada, and those who didn’t plan to be alone in retirement could be facing financial hardship, says BMO.
Divorce later in life is one factor contributing to more people finding themselves alone during retirement. About 4,000 Canadians 65 years old and over get divorced every year, shows data from Statistics Canada. Other factors leading to a single retirement include an increasing number of Canadians who never get married and higher life-expectancy rates among women.
“There’s a unique set of financial and emotional challenges they must face to help ensure they’re able to live out their ideal retirement lifestyle,” said Caroline Dabu, vice president and head, BMO Wealth Planning Group.
Build and sustain wealth for one: Singles don’t have the advantage of dual incomes and splitting basic costs of living with a spouse. There’s extra pressure for singles to focus on saving enough to be able to support themselves on their own in retirement.
Be open to changes in housing needs: Paying off the mortgage prior to retirement is an important goal, but many singles are unable to do so. Maintaining a single-person household can be too expensive, so downsizing or renting during retirement may be reasonable alternatives to help retired singles cut costs.
Devise a comprehensive health strategy: Single retirees may have a greater need to plan for alternative sources of healthcare, since they lack the extra financial support and personal care a spouse can provide. If they have no dependents or beneficiaries to support in the event of their death, singles should consider forgoing traditional life insurance in favour of investing in disability, critical illness and long term care insurance. These types of coverage provide a cushion to help offset daily living costs and unexpected expenses in retirement.
Stress test the plan: It is important for singles to make sure that their financial plan can withstand unexpected events such as job loss, a health issue and caring for a family member. These unexpected events can cause financial setbacks if additional savings aren’t built into a plan as a cushion.