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Canadians are living alone and longer — here’s how that affects retirement savings

WATCH ABOVE: More Canadians are retiring solo, think they won’t save enough: survey

The fact that Canadians are living longer is leaving some concerned that they will outlive their retirement savings.

And since Canadians are increasingly ending up single, many are also worried about the prospect of saving for retirement alone.

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A report, titled “Retiring Solo,” was released by TD Bank Tuesday and delved into Canadians’ anxieties on saving. According to the survey, sixty-five per cent of Canadians over the age of 40 are currently single, and say they will likely be living alone after retirement.

It indicated that 47 per cent of those who plan to live solo are worried they will run out of retirement savings. Thirty-nine per cent of Canadians who are saving for retirement alone say they are at a disadvantage compared to households saving with two incomes.

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Many (46 per cent) said having just one income means they already struggle with household bills. And once retired, 63 per cent said they fear living expenses will only rise. About 41 per cent also said they are afraid of not having enough money for necessities, while 39 per cent were concerned that health care would cost too much.

Rubina Ahmed-Haq, a Toronto-based personal finance expert, explained that saving for retirement while single is definitely more difficult. But there are also a few benefits.

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“If you’re planning on living alone you can choose where you want to live, and where it makes most sense to you and your money,” she told Global News. “There’s no other person that you have to consider. In that sense, you can choose the most ideal situation for you.”

But she added that while solo living may cost less in terms of expenses such as groceries, there’s no one to split the cost with — and a one bedroom apartment will cost roughly the same whether a single person or couple is living in it.

Retirement savings tips for single people

Those running a household on a single income will have a harder time saving. But Ahmed-Haq says taking charge of “variable spending” — such as groceries, transportation, vacation, eating out, and clothing — can ensure that savings goals are still met.

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“These are things that you can choose to spend less or more on,” she explains, advising people are more conscious of these expenses.

And the way to do that, she suggests, is keeping a finance journal and tracking how much money is spent.

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Shelley Smith, a Toronto-based financial planner for TD Wealth, adds that adjustments to variable expenses add up.

“Whether it is $20 a day, a week or every pay, setting aside money on a regular basis adds up in the long term,” she told Global News in an email.

Smith added that using automated savings plans, where a portion of income is directly stored away, is one way of keeping things on track.

What happens if being single wasn’t part of the plan?

According to Statistics Canada, the number of one-person households in the country is at an all-time high. But being single at times isn’t a matter of choice, but rather an unexpected occurrence.

Ahmed-Haq says that events such as divorce or death of a partner can throw off savings plans. The best thing to do in this case is keep working, if you can.

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“If you’ve retired and you’re on your own and you feel like your money is going to run out, the best thing you can do is use the skills you’ve learned in your career and do some part-time work,” she explains.

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Another option is selling assets, such as a family home. Or moving to a less expensive area.

Ahmed-Haq also advises Canadians take stock of all the benefits that are available to them, such as the Canada Pension Plan and the Old Age Security benefit. She explains these government benefits don’t start automatically, and need to be signed up for.
“It doesn’t hurt you to go online and check. Are there any other government benefits that you may qualify for that you haven’t applied for yet?” she said, explaining this is especially true for low-income individuals.

If you’re living longer, should you also work longer?

By the year 2031, Canada’s life expectancy will reach 81.9 for males, and 86 for females, according to StatsCanada. It notes that life expectancy is expected to rise steadily in the future.

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READ MORE: Retirees working longer as young Canadians struggle to find jobs

If living longer, healthier lives is the norm, Ahmed-Haq says perhaps working longer should also be the norm.

“I think people working until 70 is not a bad idea. Sixty-five [as retirement age] was established when people didn’t really live past 70,” she said.

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“If you’ve got a three-decade long retirement ahead of you, then the only way financially to make it work is to work longer.”

Regardless of when individuals leave work, the decision is a big one. Smith explains there are several questions to ask before taking the step.

“Many considerations may go into your decision, including questions such as, ‘Do I have enough money to retire?,’ ‘Am I ready to stop working?,’ ‘Should I wait to retire until I’ve reached specific financial milestones, such as paying off my mortgage?'”

This TD survey was conducted online by Environics Research Group between Oct. 26 – Nov. 3, 2017, by 2,500 adults. Of those adults 699 were above 40 years of age, and said they were currently single.