Challenges of retiring single

Opinion

Two heads are better than one. That’s certainly so for retiring Canadians.

It’s financially more advantageous — in most cases — to retire as a couple.

“They (single retirees) face pretty unique challenges because everything is up to them,” says Adam Mamdani, vice-president at RBC Insurance in Toronto. “There is not another income that they can necessarily rely on.”

More Canadians face retiring single these days, with Census data showing in 2021 some 4.4 million residents lived alone.

That’s a 160 per cent increase from 1981.

What’s more, most working Canadians face a lot of challenges when it comes to saving for retirement — single or coupled. Fewer have good workplace pensions; housing costs are exceptionally high; and more Canadians graduate from post-secondary schools to start their careers with debt.

All of which can make saving for retirement more difficult. Yet people facing retirement alone have a steeper hill to climb.

“There is no additional help for income or splitting income because you’re just one person,” says MaryAnn Kokan-Nyhof, certified financial planner with IG Wealth Management.

An individual in a couple can split their higher pension income, RRIF (registered retirement income fund) monies and Canada Pension Plan (CPP) with their lower income-earning spouse to cut taxes significantly.

Broadly speaking, single individuals have less financial resources.

“The biggest challenge for solo retirees is that life is more expensive,” says Jason Evans, a Winnipeg-based, fee-only certified financial planner with Evans Retirement Planning. “A couple can share many expenses, such as housing and transportation, which reduces the income they individually need.”

Even when single retirees do have enough money, other challenges remain.

“It’s emotional, social, medical — there are just so many things where you have to lean on your own understanding and advocacy,” says Kokan-Nyhof.

It’s particularly tricky with respect to the intersection of health and financial planning.

“If you’re not very specific in your power of attorney as to what you want, like you don’t state that you want round-the-clock home care when you’re incapacitated, even if you have the money to pay for it, you could end up in the public system where resources are stretched,” she adds.

It’s one among many issues underscoring the upcoming IG Wealth Management Walk for Alzheimer’s on May 24 at Assiniboine Park.

“You never know at what age you might start to show symptoms of the disease,” says Christine Van Cauwenberghe, head of financial planning at IG Wealth Management.

Dementia often leads to becoming unable to manage your affairs, both medical and financial. While the walk aims to raise money for research and support for individuals and families, it is also a reminder to be financially prepared.

Part and parcel to that preparation is a basic but often overlooked aspect of financial planning: having a power of attorney to manage finances and a health-care directive (or living will) for someone to make decisions on your behalf if you’re unable to make them.

Detailed planning becomes all the more important on both fronts becomes all the more important when you are single. Individuals should explicitly state in both documents what kind of care they want and how it should be paid for if they become incapacitated.

Individuals without a trusted friend, adult child or other family members who live in the same city can look to trust companies that provide executor and attorney services.

IG Wealth recently partnered with ClearEstate, an online provider of these services, including preparation and planning of documents like a will and power of attorney.

“There was such a big demand and so many situations where people were maybe not falling through the cracks but they were looking for solutions to find someone to organize and handle this stuff,” Van Cauwenberghe says.

Even with this type of service, single retirees still face the challenge of finding someone to make medical decisions on their behalf.

Van Cauwenberghe adds trust companies, lawyers and financial advisers do not provide that kind of help. You must name someone you know and can count on to make the right decisions for them.

“We typically recommend that you have someone who lives close by, if only for simple logistical reasons,” she says. “It’s better they can come see you and deal with your medical issues where you live, rather than working on them from afar.”

Of course, it’s also important to discuss beforehand with the designated individual — the proxy for health care and attorney for financial affairs — to ensure they are willing to take on these roles.

Without them, “that’s when the public trustee steps in,” says Kokan-Nyhof.

And the care the government provides may not be what an individual would have wanted.

All of this speaks to the need for individuals are to plan well ahead of retirement, even considering risk-mitigating products such as critical, disability and long-term care insurance. These should be in place as early as possible, given a major illness, injury and disability while in your earning years can derail anyone’s retirement plans.

For single individuals, however, the stakes are even higher because they are more vulnerable. Mamdani likens a person’s earning power while working to owning a machine that prints money.

“And if that machine is just one person, it really needs to be protected,” which is what insurance does.

Still, while the challenges are many for single Canadians, they’re not insurmountable. But best to plan sooner than later — and be as detailed as possible.

If you don’t know where to turn, seek advice from financial professionals.

“Part of our job is to prompt those ‘what if’ scenarios,” Kokan-Nyhof says.

Joel Schlesinger is a Winnipeg-based freelance journalist

joelschles@gmail.com