When it comes to planning for retirement, having a firm grasp over your finances will allow those golden years to shine everbright.
For working Canadians who are partnered up, achieving the ultimate goal of a comfortable and prosperous retirement is a relay race. Savings and spending responsibilities are dually doled out, with someone being held accountable to uphold their end of the bargain.
However, for single person households, the financial buttress of a partner isn’t an option, which leaves the sole onus on one individual to create and sustain a lasting nest egg.
“If you are a single Canadian, retiring on one income can require even more purposeful planning,” said Adam Mamdani,VP, RBC Insurance, in conversation with Money.ca.
“With homeownership costs and living expenses rising, singles often need to take a different approach to long-term financial and insurance planning.”
Below, Mamdani breaks down what single Canadians need to be aware of when planning for retirement in a fickle economic environment, what insurance could safeguard your financial stability and the need for sound estate planning.
Facts about single people living in Canada
The Canadian single population is growing; According to Statistics Canada, in 2021, 4.4 million people lived alone, up from 1.7 million in 1981, representing a growing trend toward single living.
Mamdani notes how single homeowners are less likely than the average Canadian to have paid off their mortgage — 16% vs. 25%.
Additionally, single Canadians are less likely than the average Canadian to:
- Identify their financial needs for retirement (16% vs. 20%)
- Express confidence that they’ll have enough money during retirement (24% vs. 32%)
- Set aside money or insurance to pay for end-of-life expenses, including funeral costs, managing property and settling their estate (21% vs. 28%)
- Max out their RRSP contributions each year (4% vs. 12%)
Financial considerations for single Canadians and how insurance can help
Single people living in Canada often need to take a different approach to long-term financial and insurance planning.
“For example, if you are unable to stay in your home as you age, do you have the financial resources available to cover the costs of a long-term care home?” Mamdani asked.
“It also means that you’re handling all financial decisions yourself.”
First and foremost, when you are still employed and making the most of saving for your nest egg, it is important to have tools in place in order to protect your income.
Studies reveal how there is a high likelihood of missing work due to illness or injury, and this especially true for mental health concerns.
According to the Canadian Psychological Association, one in five people will experience some sort of mental illness in a given year, with at least 500,000 Canadians missing out on work due to mental illness every week. This amounts to a staggering $51 billion in losses in economic activity annually.
Because every dollar counts, safeguarding your income should be a key consideration for those looking to retire within the near future — enter, critical illness or disability insurance.
“Consider this analogy: What if there was a machine in your basement that printed money, and each day you went downstairs to access that money?” Mamdani asked.
“Would you protect that machine? Because it could break down unexpectedly, it could experience some problems and may not work effectively every day. You are that machine – you work every day to earn a living. You are the most important asset in terms of your financial portfolio, and you need options to protect that asset.”
Maintaining a constant payout during retirement
Having a steady and stable cash flow is the ultimate goal of retirement savings, yet many Canadians are fearful of the well running dry.
A recent BMO poll found that a staggering 76% of Canadians are worried they will not have enough money in retirement due to cost of living constraints.
However, there is an insurance product that can help ensure that can help buttress any RRSP, TFSA and other savings/investments that are funding your retirement: an annuity.
“When it’s time to transfer your money out of RRSPs or TFSAs, one option is to purchase a payout annuity,” Mamdani stated.
“At the time of purchase, your payments are locked in and you receive monthly disbursements for a consistent cash flow during your retirement years, without worrying about what the market does or where interest rates go.”
Thinking beyond retirement
While death is not a life event that someone wistfully anticipates, preparing for it, especially with regards to dependents or other loved ones, should be given some serious consideration.
No matter what your age, family structure or income is, we all leave something behind in the form of assets, investments or even particular costs, which necessitates the need for some form of life insurance.
“You can use life insurance to leave a legacy for loved ones,” Mamdani said.
“Ensure your end-of-life costs, such as funerals, rent/mortgage costs and legal fees, are covered quickly, and that paperwork like a will, list of financial accounts and policies, is in order to leave your executor and loved ones with an easy transition.”
This can also take the form of creating an inheritance plan in the form of a will, which is something a concerning number of citizens do not actively have in place.
According to the Angus Reid Institute, 50% of Canadians don’t have a last will or testament, as those with household incomes under $100,000 are twice as likely to admit they lack the assets that would push them to write a will.
Moreover, an RBC Insurance study found that only 15% of Canadians have a plan for how their money and belongings will be transferred to loved ones after they’re gone, which only increases to 24% for current retirees.
This becomes further complicated when dealing with single households in Canada.
“You may have dependents that you hope to leave in a financially secure position, or you may be considering who will care for your estate when you’re gone,” Mamdani said.
Having a life insurance policy and segregated funds have the unique characteristic of bypassing probate.
“This is essentially a legal process that can take several months or more than a year, while a court decides what happens to your financial assets and debts after you’re gone and who is authorized to act on your behalf,” Mamdani said.
Building an estate plan can seem quite tedious, but working with a financial advisor can streamline the process and lighten your workload.
Just make sure that you are receiving trusted advice by interviewing a few financial and insurance professionals to make sure they can map out your retirement and beyond.
“Find someone whom you can connect with, someone you can rely on and who has your best interests at heart,” Mamdani said.
“Then, regularly work with that person to plan your future and put together a financial roadmap for how you’ll achieve your goals.”
Sources
1. Statistics Canada: Living solo (Sept 29, 2021)
2. Canadian Psychological Association: Psychology Works Fact Sheet: Mental Health and the Workplace (May 29, 2024)
3. BMO: BMO Retirement Survey: Over Three Quarters of Canadians Worry They Will Not Have Enough Retirement Savings Amid Inflation (Feb 12, 2025)
4. Angus Reid Institute: Lacking the Will: Half of Canadians say they don’t have a last will and testament, including one-in-five aged 55+ (Mar 7, 2023)
5. RBC: Protecting tomorrow: RBC Insurance survey finds only 15% of Canadians have estate plans (Jan 14, 2025)
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
