FORUM: There are more people “living single” than ever before in our history. So why is financial planning for singles so underreported?
Jackie: In 2017, there is more diversity in how families are represented by the media, which is a good thing. However, we still don’t have many stories that show people living on their own, even though 28 percent, according to the latest census, are living this way. I think the financial industry is still not comfortable with marketing singlehood because it is not seen as a desirable outcome for people or society. These attitudes are beginning to change, but we still have a long way to go. Singles have issues that urgently need to be addressed, given they have the less disposable income to plan with, they tend to pay more tax since they have fewer deductions, and will need to save a higher percentage of their income for retirement than the average couple.
In my book, I focus on singles over age 45 who are starting to think about retirement. The book explores the lives of five women and how they became single. Were they single by choice? Were they single by chance? These factors will certainly have an effect on how these women view themselves and their attitudes about planning for the future.
For example, a woman who has been single by chance, based on a divorce or the death of her spouse, may not be as prepared mentally or financially to plan for her future versus a woman who has been single by choice. In contrast, some women who are single by choice are optimistic about their future and are well adjusted to living a life on their own. They may have the financial means to create a comfortable retirement and are eager to work with a planner to who can help them to map out what they will need to save for the future.
FORUM: How much more in the way of assets does a single person need to have a comfortable retirement versus a couple?
Jackie: MoneySensemagazine says it best: “Sharing saves money.” If a typical Canadian couple needs $40,000 to $70,000 to live, it would not be unreasonable to suggest that a single person may need between $30,000 and $50,000 to live, depending on where they live and the kind of lifestyle they want to have in retirement. Another factor to consider is whether they have access to other pension plans. This could include a company pension plan, CPP, and OAS. If they don’t have access to any pension income they are also going to need a much larger nest egg. An advisor working with the single market would also need to think
about whether their client would qualify for the guaranteed income supplement, based on not having saved enough for retirement, in which case maxing out their Tax-Free Savings Account might be the better way to go.
FORUM: Your book doesn’t just deal with the financial aspects, it also covers the lifestyle options available to single women, everything from sex to leisure pursuits to long-term care. Why take this approach?
Jackie: One of the reasons I collaborated with my co-author Jill O’Donnell was because we felt strongly that single women had many other issues to tackle that had nothing to do with finance. How they feel about being single, where they will live as they age, how to think about planning for the future, and how they will transition from working full time are just a few topics that the book covers. We felt strongly that it was important to address these issues in the book so our audience would realize that we were interested in speaking to them as a whole person. There were already a lot of great books on the subject of personal finance, so we didn’t need to replicate them. We wanted a simple and accessible book that women felt they could relate to without the subject become too overwhelming. The personal stories of women portrayed in the book and how they became single are lessons all women could learn from, and I sincerely hope the experiences of more single women will be represented in society and that a single status will be considered a more viable lifestyle for women going forward.
FORUM: Are single people without children or immediate relatives more vulnerable when it comes to making estate planning decisions?
Jackie: According to LAWPRO, an organization that provides liability coverage to lawyers, only 56 percent of Canadians have a will. This number is expected to be much lower in the single population. Singles without children are often not motivated to make a will or to preplan their funeral. They might feel there is
no point to creating a will or a legacy because they don’t have an heir who will remember them. This leads to many singles dying intestate and having higher estate costs. They will also lose control of their estate, as the Family Law Act determines who gets the deceased person’s assets. Perhaps the most tragic loss of all is the opportunity to play a role in how they want to be remembered by their loved ones, their community, or to make a difference to organizations they cared about when they were alive. All of this is possible if single people in general, and single women in particular, are encouraged to believe that their lives are worthy of being remembered, even if they don’t have children. Many options are available to them to help. For example, instructing an executor to make a donation to a favorite charity using RRSPs in the will can help the single person reduce the taxes payable on their estate. Another option is to create a Facebook legacy timeline that acknowledges all of the important people in a single person’s life. They can use Facebook to post pictures and document what their loved ones meant to them. Creating this Facebook timeline can help their loved ones remember them for years to come. I believe the important work we can do here as advisors is to educate single clients about the myriad ways they can help their loved ones to remember them.