More Canadians are living alone in, or approaching, retirement and they face specific challenges
The latest census revealed some interesting findings about how the lifestyles and living arrangements of Canadians are changing. From the changing nature of the family structure to the aging population, Canadians are facing challenges that previous generations simply didn’t encounter.
Perhaps most significant, from a financial planning perspective, is the increasing number of people who are living alone in, or approaching, retirement.
The continuation of this trend is attributable to a number of factors. People are living longer and in many cases the healthier spouse is surviving their deceased partner for a longer period of time. ‘Grey’ divorce is also on the rise as more people choose to get divorced later in life. Some people are simply choosing to remain single as a permanent lifestyle choice.
“Those clients who are going into retirement single really need make sure their financial plan is in order,” says Christine Van Cauwenberghe, VP for Tax and Estate Planning at Investors Group. “Clients also need to make sure they have got an emergency fund; they have to care of themselves and most single people are quite cognizant of that.”
It’s often the individuals who end up becoming single later in life who have a harder time adjusting to the financial challenges of living alone. People in that group are more likely to have developed their financial plan on the assumption that they would have a spouse and would be sharing expenses.
“Those people find themselves in a tough spot because they do not have the time to make up any financial difference,” says Van Cauwenberghe. “If you separate in your 30s or 40s, you have time to save a little more, delay your retirement, or make plans that will enable you to build a bigger retirement fund.”
Incapacity is one of the most pressing things a single retiree needs to plan for. Who is going to be the client’s caregiver and, if they don’t have children, who will be their advocate when they are unable to take care of themselves? “Single people may not have to worry about estate planning as much, but they do need to think about who might be best positioned to act as their power of attorney,” Van Cauwenberghe says.
“Do they have disability insurance, critical illness insurance, and long-term care health insurance? Also, where single retirees are concerned, life time benefits are generally of higher importance than death benefits because they do not have a spouse to benefit from a life insurance policy.”
WP will speak to Christine Van Cauwenberghe again next Wednesday to find out about some of the tax implications faced by single retirees and to discuss how advisors can best help this growing demographic.
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