Retirement and the Single Boomer
By chance or by design a surprisingly large number of Canadians are facing their golden years alone. Will you be ready for retirement as a single boomer?
As Canadian longevity continues to stretch, the shape of retirement keeps shifting. And, with the robust Boomer generation at the helm, it comes as no surprise that even longer, more active retirements are on the horizon.
A Bank of Montreal report, entitled Retirement for One – By Chance or By Design shows there is a significant gap between the perception and reality of becoming unexpectedly single and its effect on personal finances.
Here are the three main elements of the report…
Time for a Reality Check
Results of the report show that many boomers may need a reality check about the impact of becoming suddenly single. Some of the findings were:
- Few respondents said they were prepared for being suddenly single
Only 38 per cent of respondents had a financial contingency plan in
case they outlived their spouse/partner.
- While few said finances played a role in their divorce, 13 per cent of married respondents feel the high cost of divorce is reason enough to stay married.
- Sixty-one percent of women state that if they became single it wouldhave a negative impact on their finances versus only 48 per cent of men.
- Women (40 per cent) who were suddenly single were slightly more likely than men (35 per cent) to have a financial contingency plan in case they outlived their spouse/partner.
- Twenty-four percent of respondents felt that finances played a role in their separation.
The report identified a number of distinct challenges for men and women over 40 who retire alone:
- Lack of knowledge about retirement programs
- Need to devote a larger share of income to living expenses, leaving less for savings
- Less room to maximize Canada Pension Plan
- Greater disparity between income and expenses
- Difficulty in housing alternatives
“Whether by divorce, death, or never marrying in the first place, the odds of being single at some point during retirement are high,” said Tina Di Vito, Director, Retirement Strategies, BMO Financial Group. “Regardless of how or why one finds themselves unmarried in retirement, one thing is certain: it
presents a unique set of financial, emotional, and planning challenges.”
Strategies for Single Retirement
The report also identified are six key areas that, if properly addressed, can improve a single person’s chance for a successful retirement, including:
- Plan for retirement as early as possible
- Build and sustain wealth
- Understand income and expenses
- Consider changes in housing needs
- Focus on social and emotional well-being
- Devise a comprehensive health strategy
Run the numbers and calculate much you need to save for retirement.