Ottawa Citizen

Retirement for one

- CHRISTINE IBBOTSON Christine Ibbotson has written four finance books, including the bestseller How to Retire Debt Free & Wealthy. askthemone­ylady.ca email info@askthemone­ylady.ca

It is common now for Canadians to retire as single — either by divorce, death or never marrying in the first place. In the past, retirement was seen as a “couple event,” but this is no longer the case. So even if you are a couple now, there is a strong likelihood you will be single at some point during your retirement.

Couples are more likely to have dual incomes, and have more access to health and pension benefits. They also tend to discuss retirement plans together more often. Singles, on the other hand, are less likely to be informed about their financial well-being in retirement and will need to make this a priority to get more involved and start a plan for retirement as soon as possible.

Loss of wealth throughout retirement is becoming more common as people live well into their 90s, and this is even more pronounced if you are single. The typical retirement of only 10 to 15 years is no longer the norm, with many retirement­s now lasting 25 to 35 years. Today, singles must devote a larger share of their income to basic living expenses and this leaves them at a disadvanta­ge when trying to save for retirement.

Everyone knows you must try to save enough money and then invest wisely to acquire an adequate rate of return on your investment­s to be able to cover future monthly expenses. But these will not be fixed costs. We also need to anticipate the rising costs of basic necessitie­s like food, fuel and clothing due to inflation. As a single, doing this all on your own can be an even greater challenge since they will need to save even more than other “coupled” retirees.

Paying into a company savings plan or pension plan is a necessity for singles to ensure they limit their risk of outliving their money. It is very important that they be cognizant of all income sources and have an estimated budget for the future, which helps to lay out expenses and spot potential gaps in savings. Housing is one expense that will hit hardest with singles, especially women who tend to live longer and will have to bear this cost on their own. Paying off debt, especially a mortgage, is imperative at retirement. If this is not a possible task, then whether you are single or a couple, you should be considerin­g downsizing or renting during retirement. You must always have alternativ­es if your situation becomes financiall­y challenged.

Why not explore different housing options such as communal living for singles or even having a boarder in your home to provide the extra income you may need?

Remember that saving for the future should be something you make part of your regular routine. A saving plan of even $100 a month can grow over time. If you start when you are young it could grow to $46,204 in 20 years, $100,452 in 30 years and $199,149 in 40 years (based on a six per cent average return, compounded monthly).

Single or as a couple, stop rationaliz­ing your spending and making excuses for not saving. Right now — make the changes you know you need to do to keep more money in your pocket.

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