Why retirement is riskier for single Canadians, even if they’ve saved diligently

For single Canadians, the path to retirement can be more challenging without a second income and the support a partner can provide.

“There's no financial support” unless you have a partner, says Renee Sylvester-Williams, author Single tax: serious advice for individual earnings. As a result, retirement may go more smoothly for couples, leaving people who plan to retire alone to take on more risk on their own.

For example, after retirement, couples can split qualified retirement income, such as taking RRIF withdrawals after age 65, which lowers their overall tax bill, Sylvester-Williams explains in her book. Couples can also pool tax breaks to cover expenses such as charitable donations and medical expenses.

While working, the higher-income partner can contribute to the lower-income partner's retirement savings through tools like spousal RRSPs, she adds. Many pension plans also include a survivor benefit that continues to be paid to the spouse after the retiree's death.

An added benefit is caregiving support, Sylvester-Williams said. “You can't expect someone to provide care, but if you're a couple, there's a higher chance that a healthy and able partner will do some of the care, and it's usually not paid for,” she said.

These differences may help explain why some single Canadians feel like retirement is out of their reach, even if they've worked and saved consistently. Experts say those who want to guarantee a secure retirement will have to adopt a different strategy than couples.

Single Canadians tend to have access to fewer tax breaks based on marital status, meaning RRSP contributions, which reduce taxable income in the year they are made, are often one of the primary ways to manage taxes as marginal rates rise, says Jackie Porter, a financial advisor at iA Private Wealth.

Given that if you make more than $60,000 a year, prioritizing RRSP contributions often makes the most sense, she says. You can then potentially use your refund to contribute to a TFSA.

However, if you are a single person and have a group RRSP through your employer, this will be a priority for you over your own RRSP as there are matching plans available. “It’s just free money,” Porter said. “You would be remiss if you didn’t take advantage of this.”

Porter adds that RRSPs also come with some trade-offs that single Canadians need to consider when planning for retirement. Unlike couples, single people cannot transfer RRSP assets to a surviving spouse tax-free. If a single person dies with money left in their RRSP, the remaining balance is considered income in the final tax year, which can result in a significant tax bill.

“It's a balancing act of getting what you need for your lifestyle without depleting the investments you have—where if you live too long, you'll run out of money,” Porter said.

This is why the timing of the Canada Pension Plan is also important for single people. Porter generally recommends that single people delay taking CPP unless they have health problems that would make it advisable to take it sooner. For women in particular, “CPP and old-age insurance are not based on individual life expectancy,” Porter said, meaning those benefits alone are unlikely to be enough. Deferring CPP when possible can result in increased lifetime income.

The reality is that most Canadians don't have enough saved for retirement, Porter says. But more and more Canadians are rethinking what retirement looks like. For many, this means taking on a side hustle to earn extra money.

However, the goal should be to save enough money to retire at age 65 or 70 if health problems prevent continued part-time work.