Whether you are single by choice or life events beyond your control, the fact is that you must be self reliant. Financial planning for a single person requires special expertise in risk management to be incorporated into your retirement income plans as they can be more easily derailed by unforeseen events.
Most of the conventional personal financial advice found online and in mainstream books is geared towards dual income families. Single adults face their own unique set of financial challenges and there are few resources online that provide this kind of specialized advice. So, the guidance of an experienced Certified Financial Planner even more important to single people.
For example, consider the fact that the current tax system is geared towards saving families on their income taxes through the many tax credits available to them which are not available to single people. Conscious tax planning is critical to the overall success of singles.
Begin with the spendable income in mind.
Throughout their adult lives, singles need to pay attention to the current and future tax burden they will face in retirement to ensure that they maximize their after-tax income at all stages and do not lose valuable government benefits to income testing rules.
Single people need more tax-free and tax advantaged income in retirement to enjoy the same level of spendable or "real money" in retirement as couples. In addition, singles must take care to avoid losing valuable income tested government benefits like Old Age Security, the Age Amount Tax Credit and Pharmacare programs in some provinces.
Running your single person household in retirement
Single Canadians have real fears about running their household in retirement.
The top 3 fears are:
- Inflation - rising daily living expenses and its effect on their quality of life
- Not having enough money to cover basic living expenses
- Trend of increasing out of pocket health care costs
These fears are almost universal and do not change regardless of how much money people have already saved in their retirement nest egg. Not having enough money or income to support oneself in retirement is the common denominator.
While these concerns are similar to those of couples, the reality of the situation is that during the saving for retirement phase of life, a single person household has greater risk of derailment due to job loss, critical illness or disability. Single Canadians need to make sure that their retirement income plan is self completing no matter what happens in their life.
Our Affluence Partners financial planning team has specialized experience and training to ensure your disability income replacement program, critical illness coverage and other coverages are aligned with your retirement income plan during the accumulation or savings phase of life.
Once you transition from your employment income stream to your retirement income stream risk management needs change and different risk management strategies need to be included in your plan. Critical illness coverage, long-term care coverage and appropriate health and dental plans support your continued personal and financial well being. Single Canadians with proper retirement income plans that provide sustainable income streams live happier and healthier lives.
Our team will help you design a plan that works best for you and protects your retirement savings and quality of life through your retirement.