It is increasingly common for Canadians to be living on their own as they enter retirement: it is a living arrangement that some plan for, while others do not. Whether single, separated, divorced or widowed, Canadians who live on their own in retirement face several challenges.

According to Toronto-Dominion (TD) Bank's Retiring Solo  survey, the results of which were released January 23, 2018, nearly two-thirds (65%) of Canadians 40 years of age or older and currently single, separated, divorced or widowed plan to retire solo. Many of these individuals fear that they are at risk of outliving their retirement savings.

With longer life expectancies and a rising cost of living, the challenges facing seniors in retirement are likely to get more serious. Advisors and dealers should be aware of these challenges and ensure they explore these issues with clients.

The Rise of One-Person Households: As implausible as it may sound, one-person households are now (for the first time in our country's history) the most common type of household in Canada. As of the 2016 Census, one-person households accounted for 28.2% of all households, surpassing couples with children (26.5%). In fact, the percentage of households comprised of just one person has increased steadily from 7.4% in 1951 to 28.2% in 2016.

A number of social, economic and demographic factors have contributed to the rising number of one-person households, such as higher separation and divorce rates. In addition, an aging population and higher life expectancy have also contributed to seniors living alone. Senior women are more likely to live alone than senior men, as they have a longer life expectancy and tend to marry men older than themselves. Among seniors, about 33% of women were living alone in 2016, compared with 17.5% of men.

The Retiring Solo Survey: TD Bank surveyed a total of 2,500 adults from October 26 to November 3, 2017. Of those, 699 indicated that they were 40 years of age or older, and were either single, never married, separated, divorced or widowed. Of the 699 single respondents, 456 indicated that when they retire, they would most likely be living alone.

The survey found that those who anticipated retiring on their own had the following concerns:

  • 47% fear that they are at risk of outliving their retirement savings;
  • 41% fear not having enough money for necessities;
  • 63% are worried about rising daily living expenses;
  • 39% are concerned about increasing healthcare costs;

According to the survey, nearly four in ten (39%) Canadians planning to retire solo believe they are at a disadvantage compared to dual-income households when it comes to saving for retirement. Forty-six percent of those polled with a single income say they struggle to save for retirement while managing their day-to-day expenses.

The Takeaway: The TD Retiring Solo survey demonstrates a high level of anxiety for individuals who anticipate retiring on their own, but it does not paint a complete picture. A further study into the investment habits of one-person households (or at least those who plan to retire solo) would provide great insights for the investment industry, as regulators and professionals look for ways to protect this growing group of the population.

Investment professionals, such as financial advisors and portfolio managers, should consider whether their clients anticipate retiring solo. The Retiring Solo survey further highlights the need to maintain up-to-date Know-Your-Client information, as many Canadians may find themselves suddenly planning for solo retirement following an unexpected life event or change in circumstances.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.